wodmarach: I think the people who you've been talking to have been taking something to cause those psychedelic colours (actually it's usually just you have too many colours all you do is set the palate to 256/high colour in compatability options)
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256 is not high colour. I'm pretty sure changing the amount of colours was one of the first things I've tried. It is a common problem for many popular older games like Starcraft and Age of Empires II on Windows Seven\Vista. The solution for Age of Empires II was to make a shortcut with some commands in it, but it took me some time to find out which type of commands to use, since they have changed from the earlier versions of Windows.
Starcraft was easier but I probably used a hour or two to fix it.
wodmarach: And stuttering sound? please tell me a game this happens in I'd love to find one.
The windows version of Heroes of Might and Magic II.
wodmarach: Or just install a virtual machine and then you can play your win98 games in win98!
Not if you want to play a 3d game or if you don't want your 800 X 600 game to cover just the center 800 X 600 pixels of the screen. That at least has been my experience with Microsoft Virtual PC 2007. Maybe there are some Virtual Machine software that is better for playing games by now? You should probably not expect problem free gaming however.
I know that Windows Seven is the system for the nearest future (unless windows 8 adds something useful) but for some people XP is the best solution right now. Or maybe it is just me.