Is finally confused what the horse was? (7)
I believe the answer is:
saddled
'what the horse was?' is the definition.
'is finally confused' is the wordplay.
'finally' suggests the final letters.
'confused' becomes 'addled' (addling is a kind of confusing).
The final letter of 'is' is 's'.
's'+'addled'='SADDLED'
(Other definitions for saddled that I've seen before include "Like a racehorse" , "Ready to ride" , "Having to put up (with) - ready to be ridden" , "Horse might be" , "stuck" .)