@TWENTY4e: Thank you so much for linking to that post, I can now get the game working, :D. WindowsXP SP3, 9800GTX. For anyone else having the problem, check out the post by 'jimbob0i0' a little more than half-way down the page. That is the solution I used, which prevailed.

I tried it also & it worked, I am glad I can go back to my original drivers.

Read this: http://www.gog.com/en/forum/the_longest_journey/choppy_performance/perm=19/#p_b_19

Don't know if it will help anyone, but I have the 4CD version of TLJ (not GOG or 2CD) and the only way I can get it to work well on my Nvidia 9600GT card is to turn off 3D acceleration. So many jaggies.... but its better than game not working.
Game actually runs if I enable 3D acceleration AND override Anti-Aliasing through drivers, but many objects in the game are invisible (like the egg in the beginning.)

You, my friend, are a solid gold rock star!!!
Whatever that was, it worked. Thank you so much!
And wow, is this an amazing game. I'm so glad I can finally play it.
Thanks again!

Be sure to post a review as soon as you can pry yourself away from it :].

I've managed to get this game running successfully fullscreen on Windows 7 64bit with latest (197.13) Nvidia drivers. Unless I use the software renderer, the game freezes at "Loading.." if ran fullscreen. I fixed this by adding the following two lines to preferences.ini
[DirectX]
bool_IsDoubleBuffer=0
I didn't find it necessary to add bool_UseHardware=0 and use the software renderer - though from only playing the opening scene the only difference seems to be that shadows look unpleasant with the software renderer (though can be disabled I believe). The character models don't look pretty either way. Forcing AA using the Nvidia control panel improves the appearance, but triggers graphical glitches in the game.
This issue is not at all TLJ-specific, but it gave me some trouble. My monitor's built in scaling will stretch rather than using 1:1 mapping. The solution is to enable the setting "Use NVIDIA scaling with fixed-aspect ratio" in the Nvidia control panel (Display->Adjust desktop size and position). This sounds straight-forward, but I (like others) have found this setting does not work, and would always switch back to "Use my display's built-in scaling". I managed to make the setting stick using the following steps. They may not work for you.
1. Change desktop resolution to 1024x768
2. Select 'use nvidia scaling with fixed-aspect ratio'
3. Open a game and verify the scaling is working
4. Switch to your native resolution (the "change to the native resolution" button worked for me).
5. Verify the Nvidia scaling option is still selected, check it works and then leave the setting well alone.

Some of the thread links in this post no longer work. Here's the Windows XP solution they found:

Click Start button
Click My Computer
Click C drive (usually local disk)

At the top of the window, there will be a number of options: File, Edit, View, Favorites, Tools, Help
Click Tools
Click Folder Options
Click the View tab
Under Hidden files and folders,
Click "Show hidden files and folders" so that it is on.
At the bottom of the Folder Options window, hit "OK"

In the C drive window,
Click Documents and Settings
Click your username (the name at the top of the Start button menu)
Click Application Data
Click The Longest Journey
right-click Preferences.ini
Select "Open With..."
Find and select Notepad
Click "OK"

(It is a good idea at this point to make a copy of this file as it is now. File > Save As Preferences.bak is one way to do this. Just make sure you open Preferences.ini again afterwards)

Replace the [DirectX] portion of the file (or add if it doesn't exist) with this:

[DirectX]
GfxDriver=display
int_BitDepth=32
bool_IsDoubleBuffer=0
bool_UseHardware=0
bool_StartFullscreen=1
bool_ForceSingleBuffer=1

Save the file.
Launch The Longest Journey.

Credit OmegaX (Registered Aug 9 2009 from Peru) for the DirectX part of the solution.

Thanks a lot to both you and OmegaX. Made the changes you suggested and fired up the game, and it worked now, despite having the latest Nvidia driver. Excellent stuff! :)

An easier solution to all this:
Is to click Start, click Run... and type in %appdata% and hit enter. From there, just go to The Longest Journey folder.

Except when, e.g. for other games, it needs to be %LOCALAPPDATA%. I for one can do without Window's "help" hiding files & folders.

Me too (this is one of the first settings I change with any new windows installation), but for some people, un-hiding hidden files and folders can lead to serious problems due to accidental deletion and such. Thanks for adding the %localappdata% info, that is very helpful. :-)

Meh, maybe showing hidden OS files. Of course you should be running under a regular user account and wouldn't have permissions to delete them anyway. Hiding hidden files & "known file extensions" are both dumb policies and causes more trouble than it ever prevented.