Instrument playing encapsulating old instrument (7)
I believe the answer is:
Here is my best explanation:
'instrument' is the definition.
(bassoon is a kind of instrument)
'instrument playing encapsulating old' is the subsidiary indication.
'instrument' becomes 'bass' (bass is a kind of instrument**).
'playing' becomes 'on'.
'encapsulating' means one lot of letters goes inside another (I've seen this in other clues).
'old' becomes 'o'.
'on' going around 'o' is 'oon'.
(Other definitions for bassoon that I've seen before include "wind player", "Tenor of the oboe family", "Large woodwind instrument", "This musical instrument", "Instrument heard by Wedding-Guest", "Low wind instrument", "No, a boss would be a musical instrument", "Double-reed instrument", "Wind instrument" and "Hollow instrument".)