I had exactly the same problem! It's the part where you enter town and you see all the smoke coming from the chimneys. I'm interested, would it be possible for you to see if the same thing happens in Wutai? I ran the game on a K6 333mHz, don't know about ram though, either 32mb SD or 288mbSD, I did run it in software back then, cause I didn't know about the TNT patch.