Medicine for the mind to settle personal problem (7)
I believe the answer is:
placebo
'medicine for the mind' is the definition.
(a placebo acts psychologically)
'settle personal problem' is the wordplay.
'settle' becomes 'place' (to settle something somewhere is to place it there).
'personal problem' becomes 'bo' (informal abbreviation for body odour).
'place'+'bo'='PLACEBO'
'to' is the link.
(Other definitions for placebo that I've seen before include "Medicament often given as a pacifier" , "Medicine given solely for psychological effect" , "Medicine that's not" , "Medicine given for its psychological benefit alone" , "drug for clinical trial" .)