I have no idea what's happening there. Does it do it in both full-screen and windowed mode? I haven't played more than a couple of minutes of FF9 using epsxe so I haven't made it to that part yet.
You might try resetting all your options to the lowest, most basic settings prior to that scene and if that gets you through it then maybe crank them back up again?
Other than that, then the epsxe forums might be the place for you.
Hope that helps.... :cry: