Did you change the music any? I remember thinking that with the Yamaha XG stuff or whatever installed (that came with the game) the PC versions sounded SO much better (unlike with the standard midi versions, which sounded worse than the PS versions). I've been wanting to hear those exact versions again. Problem is, Yamaha seemingly abandoned that program years ago and it doesn't appear to be compatible with newer versions of Windows. So now every time I hear those songs I think "This just doesn't sound like it's supposed to".
With PSX's FF7 sound engine it's impossible to make it sound (significantly) better. Most PSX games that use sequenced music write to sound RAM before every new song. However, FF7 only writes to it at two times:
1. When the game boots
2. In the cutscene before the final battle, voice samples are overwriting the last part of sound RAM (and it remains overwritten during the whole ending)
Since there is limited room in sound RAM and that it has to hold all the instruments for the whole game, the instrument's quality is poor. In the japanese FF7 demo, we can hear a couple of songs with better instruments (because the soundtrack wasn't finished so they needed less instruments, meaning more space for them) and it indeed sounds much better.
The only way to make a PSX version of FF7 with better sounding music would be to completely change the sound engine to be more like other PSX games where samples are loaded on song change, or to use Grandia-style streaming that supports disc access while streaming music. Both would be major changes to FF7's engine that would require much hacking skills.