IPX_protocol_no_longer_supported
Basically, LOM was made in 1998 where playing over the internet just wasn't done yet. The best you could do back then was connect using a modem, or bring your computers into the same room and hook them all together into a network. Playing over a network is what the IPX in the link above was used for. If that's what you're doing, you can turn that on by following the instructions here. An IPX emulator is basically something that does connect 2 people from over the internet, and then allows them to communicate with IPX.
I'm not 100% aware of any IPX Emulators you can use. I remember I used to play a lot over MPlayer.com which had an option to play an IPX game over the internet, but MPlayer.com is no longer with us. I think it was replaced with Gamespy Arcade. A quick search shows me that Kali.net is still around. I've never tried using that, but I believe that did the same sort of thing.
I also found this in the Conquest of the New World support, but I don't own that game, so I can't answer any questions about it.. It looks like that game had an IPX emulator supplied with it. If that's true, I have no idea if it would support LoMS as well.

Ah, I didn't know there was game-specific support available there. I actually asked this question on behalf of someone on another forum, so on his behalf again I will say thank you very much for the info! I appreciate it. :)

I've used Kali in the past, back when Warcraft II (DOS version) was very popular. You should also be able to use IPX over Himachi?

I played a lot of games over the net back in the mid-late 90's. Myth I/II via Bungie.net, Ultima online, etc. There was net support back in those days :p. Just many games also had the modem to modem connection as well. Man did my dad get mad at me for running up the phone bill back then.

Lords of Magic: Special Edition was just added to GameRanger yesterday, so you'll now be able to play it online just as easily as with Lords of the Realm II and III.

It doesn't work for me and my sister. Both win7 machines. We tried gameranger, Ipxwrapper, and tunngle. ALl ports open, all firewalls off. Nothing worked.

Try KALI, trial version is free for 30 days.

U can always play the game via gameranger. To be able to play u just have to rename some exe files.
Try renaming "Game.exe" and "Lords3.exe". So that the "Game.exe" is "Lords3.exe" and that "Lords3.exe" is "Game.exe". I've tried this out with a friend and it worked. We had a lof of fun playing it, since we just make an aliance and destroy the bots.
So the "Lords3.exe" has to be 5 Mb's big, and the "Game.exe" has to be around 100 kb's.

Have fun. :D