I thought Cloud was in soldier, he just wasn't the higher ranked one (Zack was). If I remember right, Cloud was the soldier who got motion sick in the transport to his home town (Zack and Sephiroth were travelling in it too) and was one of the two soldiers dressed in the blue uniforms.
I haven't played the game for a while but do remember that coming out during the dream like bit when both Tifa and Cloud were in the lifestream and she was inside his head trying to bring out the real him. I could be wrong though and hope someone will correct me if I am
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