Narzoul, hi! Tank you for wrapper. It is still related on OS version, i mean, no Win7 support? Not like a big deal, but if GOGs Heroes3 strickly for Win10+ now i would know what to say to someone who still on Win7 and faced issues.

xdd.dll - this is second time i see custom name. First was GOGs own DX Wrapper with xdraw.dll in Warcraft 2 (unlike usual ddraw and dixi dll). I doubt that name can solve issue of Windows sometimes prevent dll to be executed. If Defender or DEP decide to brake game they would do no matter which file name. It is issue from WinXP, no wrappers related. DEP should be entirely permanently disabled. Initially not intended to work properly in WinXP with messed settings, and literally zero changes made to it since then (as Ms care about fixing real issues).
And afterall most - before and after - releses use standard ddraw name on GOG.
By the way, on ZOOM-Platform too, but they dont have own wrapper and use your Narzoul one and maybe someone else (there so many with similar names).

So indeed, what possible point to rename it? In Warcraft 2 case at least there was Launcher and two ways to launch the game (for Diablo they use subfolders to avoid issues with BattleNet functionality). Maybe at some point they want add own Launcher to the game? No games do that. Game is 4:3 and only 4:3, only 800x600. By proper video driver settings you can achieve 12:9 correct scale stretching. Video driver and display.
Set where possible from system to game/wrappers settings to set Keep Aspect ratio +integer scaling and if there is such box Enforce by driver [√] box.

Otherwise, if you still want BLURED and DIS-PROPORTIONed stretching - since game include graphical wrapper best way is disable Keep ratio in its settings. Narzoul already point you to ini file.
If you want better way to play widescreen - use Heroes3GL. It is more than just a wrapper and yet not much as HD+ mod. It is NEVER possible to keep good image quality without using such 3rd party widescreen mods.
(If you dont want widescreen DDrawCompat would be more authentic way to play Heroes 3 than even Heroes3GL).

HeroesGL make game work borderless fullscreen windowed (so Desktop resolution/etc in use) and through OpenGL driver, with emula... Simulating resolutions inside window (whatever you want, no technical restrictions there).
That way make sure to stay Keep Aspect ratio [√] on. You get properly scaled but zoomed screen. Perfect solution not possible whatever 3rd party solution. 4:3 games never be perfectly look at 16:9. Here is POV disadvantage.

If you dont want to use any widescreen mods - gameplay affecting or not - there is no need to bypass DdrawCompat.
And tweaks are REQUIRED to make game WORK PROPERLY. Since Win Vista and some Nvidia (only) drivers legafy DirectX support goes worse and worse. Incl DirectX10 on Nvidia. Win8+ did fix what broken in WinVista7 but in a lame way - fullscreen modes work noticable slower and delayed, for most games without FPS drops.

To change some output settings just configure included ini file. There is some old gmae(s) on ZOOM-Platform set to windowed by default by Narzoul's wrapper. I did alter ini file and thats it. Same game on GOG come without wrappers. I didnt decide to erase it from ZOOM, just cause it didnt included on GOG. Let it stay. That make game work a bit better on modern Windows.

GOG pre-set Disable Fullscreen optimization (highdpiaware) compatibility. Last time i check it it didnt do anything. But im almost never use Win10 and outdated builds only. Maybe it did start to do something.

There is advanced compat flags set by game.dtb file inside (made by Ms AppCompatToolkit and setup during install by DISMM service). They do nothing either.
BUT! Most of that flags should be disabled to use 3rd party wrappers, including DdrawCompat. Any really needed flags would be applied by DdrawCompat.

(It seems forum dont recognize quotes anymore, manually set ones, and goes into loop)