Has anyone had any problems with running this game as it jumps out to windows to connect to the internet for divx which sometimes allows me to go back to the game but more often just freezes.
As well as that the graphics hardware mode doesn't seem to work and i got the windows blue screen crash while trying it.
I am using XP 32bit. AMD5200+, 4GB ram & an Nvidia 8800GT.
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I am having problems, too. The game launches, black screen comes up, but instead of showing the splash screen, it goes back to windows after readjusting my resolution, then hangs.
I'm running Vista 32 with an C2D e6600 and an nVidia 8800gt

It is rather generic question, but do you have up to date DirectX / graphic drivers?
Can you play movies outside the game? (They're in ./Cinemats folder)

yes, and yes

Maybe try editing the INI by changing Playback=1 to Playback=0 under the [cinemat] section of the INI file untill there's a proper fix. Assuming it works...

8800s were rather infamous for many problems, so it may be card related issue.
In INI file, what do you have under [Graphics]?

I reinstalled and now it works. I'll take a look at ini, though, and see what it says. I didn't know that the 8800 had problems. I've never had any with it.

True, reinstalling / rebooting can solve 90% problems with applications ;)
If it works it's enough, so nevermind ini.

Disabling the movies seems to work. For some reason when they are running it keeps jumping back to the desktop when starting with them.
This computer downstairs runs the game in hardware mode ok (Nvidia 6800GS), although the graphics still look the same as in software mode.
All my drivers are up to date.
Yes they run ok from the folder.

It isn't a codec problem then. Movies are in lower resolution than game, so you could try turning off scaling in Nvidia control panel, only to see if it changes anything.
Playing without movies sucks (few, especially in later stages, are story related), so contacting GOG support wouldn't hurt.

@thornton_s: try uninstalling and reinstalling. that fixed the problem for me.

That's probably it. I'm using nvidia scaling w/ aspect ratio and never had any problems.
Good thing it worked.

At my end, in software mode, the PC was gliding around instead of walking around. The only benefit i got from hardware mode is that it fixed that.

I've encountered similar problems...game not starting properly, black screen startup, crashing etc.
changing playback=0 helped.