forcepushthinkr: I've run into the same problem. The game keeps crashing, specifically it seems, whenever you look at the water.
While the suggested solution works, I don't think this should be considered an acceptable response. The game does offer Direct3D as a rendering option, so the option should be fully functional. This is definitely a bug and should be fixed, or the Direct3D option patched out. Going ahead saying "yeah, I know it says it can, but it can't, so don't use it." is just plain lazy.
UPDATE:
After switching to 3Dfx, the game again crashes about 3 minutes further in.
Try switching back to Direct3D in olcfg.exe and then clicking on the Advanced button. First, try enabling everything but the bottom two options. I suspect that the "Render everything in one pass" option might be what's causing your problem (the other option won't crash the game, but should be disabled, anyways, since it makes text nearly unreadable). If the problem persists with the water, try disabling both of the "translucency" options, as well.
