The game was working fine until Estelle got captured. When she looks out the window the ship is seen and then the screen goes black but the music is still playing. Has anyone encountered this bug ?

Yes, and it sounds like you're having trouble with the in-game movie player. There's supposed to be an animated sequence there introducing you to the society's mothership; it's not the last movie you'll run into, either.

I currently have Trails SC installed on two different machines, one running XP and the other on Windows 7. The Win7 machine pulled off the movies without a hitch, but the XP one only played the opening sequence for me and stoutly refuses to do any of the others. I either get the aforementioned black screen, or alternately, an error message complaining that I don't have the Trails CD in my disc drive.

So here's your unfortunate workaround, unless someone out there knows how to beat the movie player into submission: disable movies at the launcher. You'll get through all of the black screen nonsense, except at one point: the end credit roll. For some reason, you're obliged to listen to the song all the way to the end.

I was able to watch the movies after installing K-lite Codec Pack.