He imagines me in gloomy surroundings (7)
I believe the answer is:
dreamer
'he imagines' is the definition.
The answer is a person as well as being a singular noun. This is suggested by the definition.
'me in gloomy surroundings' is the wordplay.
'in gloomy' becomes 'drear' (I've seen this before. I am not sure about the 'in' bit.).
'surroundings' means one lot of letters goes inside another.
'me' inserted inside 'drear' is 'DREAMER'.
Can you help me to learn more?
(Other definitions for dreamer that I've seen before include "He has visions" , "Mitty type" , "One imagines" , "Idealist - visionary" , "Martin Luther King" .)