No you are not remembering wrong, the quality of the music in the PC version of final fantasy VII is much worse... But you can fix that by downloading the mod that I linked below. The installer will replace all the music with the music from the original PSX version!
http://forums.qhimm.com/index.php?topic=12787.0 --- Playing: Final Fantasy VII on Steam | The Last Remnant http://www.youtube.com/user/SakuraValkyrie
It sounds like the OGG music included with the Steam version was made by playing back the MIDI files from the original PC version. One wonders why they simply didn't use the music they composed for the PSX version directly :P.