Karekristensson: Finally got this problem solved, by pure chance even.
I was having issues with another game, that being Startopia, with the intro videos being in the upper left corner and not visible AND no visible mouse cursor ingame, and I was checking the forums of that game here when I read a solution that seemed to work for everyone which involved turning the DSR off in the NVIDIA 3D graphics menu via its control panel.
So I did and it worked for that game and I all of a sudden thought "What if that worked for Lands of Lore 3 as well?", so I downloaded and reinstalled the game, lo and behold the ingame characters, monsters and objects were no longer invisible. :)
I highly suggest that anyone having similar issues with these games to try and turn DSR off.
Changing from Direct3D or whatever the options are seemed to solve it for me.