I just bought this game from GOG and for some reason the frame rate is terrible. I have no idea how to change this and it's really ruining all of my fun with this game. Anyone have any ideas on how to get it running smoothly?

If setting the resolution to 320 x 200 (Normal Mode) won't help, then there's not much more options than getting a better computer or hoping that the source code gets released one day.
Though, assuming that the DOSBox that comes with the GOG Blood is still 0.73, you should update to 0.74 which makes Blood run remarkably more faster.

I'm not too computer smart, so I don't know exactly how fast it should run but I have 1GB of RAM? It runs Counter Strike Source and Half Life 2 pretty well.
Running in in 320 x 200 does help a lot, but it still is choppy at parts with lots of enemies and some of the bigger, open areas of the game. However, I did not know there was a DB .74 out yet so I will give that a try. Thank you for your reply. : )

I can attest to the fact that upgrading DOSBox to 0.74 gave me quite a performance boost. You can download the new one straight from the DOSBox website and just copy over the existing DOSBox files in your GoG/Blood Directory. Or in whatever folder you installed McTecman's Blood Launcher. Which, if your didn't get it already you should. It's here:
http://www.gog.com/en/forum/blood_series/one_unit_whole_blood_launcher_map_amp_amp_mod_collection_too

I just got DOSBox 0.74 and now the game runs perfect : ). Daedolon and morhlis, thank you so much for the help. I was so sad when I finally got this game again and it would lag so much.
What does McTecman's Blood Launcher do?

You could also try to set the output mode to opengl, ie. output=opengl in the dosboxBlood.conf file instead of the regular overlay, this might also give a slight boost to the game speed.

The Blood Launcher is excellent. You can read all about it in the thread link I provided. But to give you a quick rundown, basically it gives you a one stop menu to launch not only Blood and Cryptic Passage, but also more than 30 new episodes for Blood. It also comes with ZBlood which is an excellent port of Blood for ZDoom, AND it has hundreds of individual user maps. I positively love it! Get it ASAP!

Yup, I use OpenGL and it is the best of all of the options. I shall have to try out this Blood Launcher, 30 more episodes sounds amazing.
I also had a couple of other questions about increasing performance.
Does setting the priority level of DosBox to high or realtime increase performance?
My computer has a dual core processor, does changing the affinity have any effect on performance?
Does tweaking anything on the DoxBox config file such as memsize increase performance?

I wouldn't go for realtime performance, but higher seems to work as fine as normal, assuming you don't have other resource-heavy programs running in the back.
DOSBox has no dualcore support yet, so again you should only change the affinity to the second core if your first one is being used by other programs.
Memsize should be set to 63 for Blood, although this will not change the performance to any direction, really. This allows you to get rid of the low memory warning, though, and Blood should feel happy about DOSBox. Also 63 because I, as I recall it, 64 and above open up memory for up to 127 (128) which seems useless as you're not needing that much for the game. Note that DOSBox will still take around 64 on its own.

mostly bugfixes is not only bugfixes. :P

I got recently a fairly awesome game called Chasm - The Rift, quite beneath to Blood ;) but nice in gameplay and very hungry for pleasant hardware . I installed it through dosbox 0.74 and WOW, it runs on my machine with an likely outdated but surely nice overclocked dual core like a charm in 640x480 the highest what the game gives. I read that this game is a bit choppy over 320x200, so I'm pretty sure that 0.74 will give an improvement over the older versions. However, Blood runs quite well with 0.74 as mentioned from others above.
Edit: Sorry I forgot the link to dosbox where you could read the improvements. http://www.dosbox.com/

Well, I got .74, and most of the game runs decently. I typed in the cheat "rate" to check the framerate, and at some parts it gets so laggy I'm down to 2 frames per seconds. Is there any way to force DosBox to run more FPS?

Can you attach the config file you use with .74? Feel free to remove any mention of directories paths for privacy sake :)

It won't let me attatch the config file but I can copy paste.
# This is the configurationfile for DOSBox 0.74. (Please use the latest version of DOSBox)
# Lines starting with a # are commentlines and are ignored by DOSBox.
# They are used to (briefly) document the effect of each option.
[sdl]
# fullscreen: Start dosbox directly in fullscreen. (Press ALT-Enter to go back)
# fulldouble: Use double buffering in fullscreen. It can reduce screen flickering, but it can also result in a slow DOSBox.
# fullresolution: What resolution to use for fullscreen: original or fixed size (e.g. 1024x768).
# Using your monitor's native resolution with aspect=true might give the best results.
# If you end up with small window on a large screen, try an output different from surface.
# windowresolution: Scale the window to this size IF the output device supports hardware scaling.
# (output=surface does not!)
# output: What video system to use for output.
# Possible values: surface, overlay, opengl, openglnb, ddraw.
# autolock: Mouse will automatically lock, if you click on the screen. (Press CTRL-F10 to unlock)
# sensitivity: Mouse sensitivity.
# waitonerror: Wait before closing the console if dosbox has an error.
# priority: Priority levels for dosbox. Second entry behind the comma is for when dosbox is not focused/minimized.
# pause is only valid for the second entry.
# Possible values: lowest, lower, normal, higher, highest, pause.
# mapperfile: File used to load/save the key/event mappings from. Resetmapper only works with the defaul value.
# usescancodes: Avoid usage of symkeys, might not work on all operating systems.
fullscreen=false
fulldouble=false
fullresolution=original
windowresolution=original
output=surface
autolock=true
sensitivity=100
waitonerror=true
priority=higher,normal
mapperfile=mapper-0.74.map
usescancodes=true
[dosbox]
# language: Select another language file.
# machine: The type of machine tries to emulate.
# Possible values: hercules, cga, tandy, pcjr, ega, vgaonly, svga_s3, svga_et3000, svga_et4000, svga_paradise, vesa_nolfb, vesa_oldvbe.
# captures: Directory where things like wave, midi, screenshot get captured.
# memsize: Amount of memory DOSBox has in megabytes.
# This value is best left at its default to avoid problems with some games,
# though few games might require a higher value.
# There is generally no speed advantage when raising this value.
language=
machine=svga_s3
captures=capture
memsize=16
[render]
# frameskip: How many frames DOSBox skips before drawing one.
# aspect: Do aspect correction, if your output method doesn't support scaling this can slow things down!.
# scaler: Scaler used to enlarge/enhance low resolution modes.
# If 'forced' is appended, then the scaler will be used even if the result might not be desired.
# Possible values: none, normal2x, normal3x, advmame2x, advmame3x, advinterp2x, advinterp3x, hq2x, hq3x, 2xsai, super2xsai, supereagle, tv2x, tv3x, rgb2x, rgb3x, scan2x, scan3x.
frameskip=0
aspect=false
scaler=normal2x
[cpu]
# core: CPU Core used in emulation. auto will switch to dynamic if available and appropriate.
# Possible values: auto, dynamic, normal, simple.
# cputype: CPU Type used in emulation. auto is the fastest choice.
# Possible values: auto, 386, 386_slow, 486_slow, pentium_slow, 386_prefetch.
# cycles: Amount of instructions DOSBox tries to emulate each millisecond.
# Setting this value too high results in sound dropouts and lags.
# Cycles can be set in 3 ways:
# 'auto' tries to guess what a game needs.
# It usually works, but can fail for certain games.
# 'fixed #number' will set a fixed amount of cycles. This is what you usually need if 'auto' fails.
# (Example: fixed 4000).
# 'max' will allocate as much cycles as your computer is able to handle.
#
# Possible values: auto, fixed, max.
# cycleup: Amount of cycles to decrease/increase with keycombo.(CTRL-F11/CTRL-F12)
# cycledown: Setting it lower than 100 will be a percentage.
core=auto
cputype=auto
cycles=auto
cycleup=10
cycledown=20
[mixer]
# nosound: Enable silent mode, sound is still emulated though.
# rate: Mixer sample rate, setting any device's rate higher than this will probably lower their sound quality.
# Possible values: 44100, 48000, 32000, 22050, 16000, 11025, 8000, 49716.
# blocksize: Mixer block size, larger blocks might help sound stuttering but sound will also be more lagged.
# Possible values: 1024, 2048, 4096, 8192, 512, 256.
# prebuffer: How many milliseconds of data to keep on top of the blocksize.
nosound=false
rate=44100
blocksize=1024
prebuffer=20
[midi]
# mpu401: Type of MPU-401 to emulate.
# Possible values: intelligent, uart, none.
# mididevice: Device that will receive the MIDI data from MPU-401.
# Possible values: default, win32, alsa, oss, coreaudio, coremidi, none.
# midiconfig: Special configuration options for the device driver. This is usually the id of the device you want to use.
# See the README/Manual for more details.
mpu401=intelligent
mididevice=default
midiconfig=
[sblaster]
# sbtype: Type of Soundblaster to emulate. gb is Gameblaster.
# Possible values: sb1, sb2, sbpro1, sbpro2, sb16, gb, none.
# sbbase: The IO address of the soundblaster.
# Possible values: 220, 240, 260, 280, 2a0, 2c0, 2e0, 300.
# irq: The IRQ number of the soundblaster.
# Possible values: 7, 5, 3, 9, 10, 11, 12.
# dma: The DMA number of the soundblaster.
# Possible values: 1, 5, 0, 3, 6, 7.
# hdma: The High DMA number of the soundblaster.
# Possible values: 1, 5, 0, 3, 6, 7.
# sbmixer: Allow the soundblaster mixer to modify the DOSBox mixer.
# oplmode: Type of OPL emulation. On 'auto' the mode is determined by sblaster type. All OPL modes are Adlib-compatible, except for 'cms'.
# Possible values: auto, cms, opl2, dualopl2, opl3, none.
# oplemu: Provider for the OPL emulation. compat might provide better quality (see oplrate as well).
# Possible values: default, compat, fast.
# oplrate: Sample rate of OPL music emulation. Use 49716 for highest quality (set the mixer rate accordingly).
# Possible values: 44100, 49716, 48000, 32000, 22050, 16000, 11025, 8000.
sbtype=sb16
sbbase=220
irq=7
dma=1
hdma=5
sbmixer=true
oplmode=auto
oplemu=default
oplrate=44100
[gus]
# gus: Enable the Gravis Ultrasound emulation.
# gusrate: Sample rate of Ultrasound emulation.
# Possible values: 44100, 48000, 32000, 22050, 16000, 11025, 8000, 49716.
# gusbase: The IO base address of the Gravis Ultrasound.
# Possible values: 240, 220, 260, 280, 2a0, 2c0, 2e0, 300.
# gusirq: The IRQ number of the Gravis Ultrasound.
# Possible values: 5, 3, 7, 9, 10, 11, 12.
# gusdma: The DMA channel of the Gravis Ultrasound.
# Possible values: 3, 0, 1, 5, 6, 7.
# ultradir: Path to Ultrasound directory. In this directory
# there should be a MIDI directory that contains
# the patch files for GUS playback. Patch sets used
# with Timidity should work fine.
gus=false
gusrate=44100
gusbase=240
gusirq=5
gusdma=3
ultradir=C:\ULTRASND
[speaker]
# pcspeaker: Enable PC-Speaker emulation.
# pcrate: Sample rate of the PC-Speaker sound generation.
# Possible values: 44100, 48000, 32000, 22050, 16000, 11025, 8000, 49716.
# tandy: Enable Tandy Sound System emulation. For 'auto', emulation is present only if machine is set to 'tandy'.
# Possible values: auto, on, off.
# tandyrate: Sample rate of the Tandy 3-Voice generation.
# Possible values: 44100, 48000, 32000, 22050, 16000, 11025, 8000, 49716.
# disney: Enable Disney Sound Source emulation. (Covox Voice Master and Speech Thing compatible).
pcspeaker=true
pcrate=44100
tandy=auto
tandyrate=44100
disney=true
[joystick]
# joysticktype: Type of joystick to emulate: auto (default), none,
# 2axis (supports two joysticks),
# 4axis (supports one joystick, first joystick used),
# 4axis_2 (supports one joystick, second joystick used),
# fcs (Thrustmaster), ch (CH Flightstick).
# none disables joystick emulation.
# auto chooses emulation depending on real joystick(s).
# (Remember to reset dosbox's mapperfile if you saved it earlier)
# Possible values: auto, 2axis, 4axis, 4axis_2, fcs, ch, none.
# timed: enable timed intervals for axis. Experiment with this option, if your joystick drifts (away).
# autofire: continuously fires as long as you keep the button pressed.
# swap34: swap the 3rd and the 4th axis. can be useful for certain joysticks.
# buttonwrap: enable button wrapping at the number of emulated buttons.
joysticktype=auto
timed=true
autofire=false
swap34=false
buttonwrap=false
[serial]
# serial1: set type of device connected to com port.
# Can be disabled, dummy, modem, nullmodem, directserial.
# Additional parameters must be in the same line in the form of
# parameter:value. Parameter for all types is irq (optional).
# for directserial: realport (required), rxdelay (optional).
# (realport:COM1 realport:ttyS0).
# for modem: listenport (optional).
# for nullmodem: server, rxdelay, txdelay, telnet, usedtr,
# transparent, port, inhsocket (all optional).
# Example: serial1=modem listenport:5000
# Possible values: dummy, disabled, modem, nullmodem, directserial.
# serial2: see serial1
# Possible values: dummy, disabled, modem, nullmodem, directserial.
# serial3: see serial1
# Possible values: dummy, disabled, modem, nullmodem, directserial.
# serial4: see serial1
# Possible values: dummy, disabled, modem, nullmodem, directserial.
serial1=dummy
serial2=dummy
serial3=disabled
serial4=disabled
[dos]
# xms: Enable XMS support.
# ems: Enable EMS support.
# umb: Enable UMB support.
# keyboardlayout: Language code of the keyboard layout (or none).
xms=true
ems=true
umb=true
keyboardlayout=auto
[ipx]
# ipx: Enable ipx over UDP/IP emulation.
ipx=false
[autoexec]
# Lines in this section will be run at startup.
# You can put your MOUNT lines here.