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Installed MM7 from Gog. Ran it once. Downloaded and installed Grayface Patch 2.0. Ran the game again. The mm7.ini file is basically empty, with only:

[Install]
PatchLods=1

This doesn't do anything. I've also tried installing the old 1.6.2 patch and it does the same thing. What did I miss?
idk if you tried this but I found after I installed the grayface patch in mm7 I had to run the game using the MM7Setup launcher and not the default one. you may also want to try using this launcher to change between 3D software and hardware to see if that makes a difference.

Hope this helps
What worked for me was getting the mm7.exe from a fellow Gog player.