Well, if this problem exist on vista then gog version is incompatible with it. Why do we see then
"compatible with Windows XP & Windows Vista (32 & 64 bit)"
when its a lie

I don't know who figured that out, but thanks a lot! It solved the problem for me too.

I tried that and it worked for me. Too bad it requires Fallout 1 as well. (I was running Windows 7 by the way.)

I just tried it and it works like a charm. Thanks.

I don't know why it works either, but I'm damn glad it does :) Now all I have to do is finish up FO1, then jump straight into FO2 without any trepidation.

Yes, I am also running Windows 7 but with Themes. Ho0w do I go about fixing the colors problem?

For everyone who may still be having trouble with color problems or display problems with black screens, etc., check out this link. Randomnly found it in a topic on gamefaqs and it helped fix any display issues for me. If it doesn't work the first time then restart your computer and try again, it worked for me when the tool randomnly didn't work sometimes (probably just my computer).
http://blog.macuyiko.com/2009/07/solving-color-problem-red-grass-purple.html

Thank You so much, this totally fixed it.

Well, I could not find a draw.ini file nor a Fallout2.cfg file.
One thing that worked for me was changing the background to a solid color, closing the windows and running the game. Some user already mentioned this and full credit goes to him or her.
However, I just discovered another method that seems to work like a charm.
Take your entire GOG folder from your Programs folder and copy and paste it into your Documents folder (or some other location besides it's current one).
Create the shortcut from THAT NEW LOCATION and slap the shortcut onto your desktop (for convenience). Game should run like a charm.
:-)
ETA: OK, this doesn't work. Shit.

ddraw.ini is part of . You can download it stand alone but it also comes with [url=http://www.nma-fallout.com/forum/viewtopic.php?t=55960]Killap's Unofficial Patch and Restoration Project. Links to latest versions can be found from his signature.
You should install all games outside program files folder (c:\games or something)when using Vista or Windows 7 as UAC tends to be a bitch and can cause all sorts of problems.

Guys, i re-downloaded fallout 2 and now i see that color issue is fixed. I wonder how they have done this. Was it just new dll or work on exe file. How mods will work with such "fixed" fallout?

i know its kinda late but i want to send my thanks to you. i had that color problem in fallout 1 and it is fixed now.

I see people are still having this problem. I have tested this on several systems running Windows 7 32 and 64 bit. Install sfall AND the high resolution patch. Make sure to run the f2_res_patcher.exe file that comes with the hi-res patch or this WON'T work. LEAVE the line as "mode = 0" in the the ddraw.ini file and CHANGE the line "COLOUR_BITS = 8" to "COLOUR_BITS = 16" in the f2_res.ini file. This will fix ALL the funky color problems and keep the movies from being messed up! This way you can enjoy the game in a higher resolution, not have the movies get all messed up, & no messed up colors.
Also don't forget to change the resolution in the f2_res.ini file to the resolution you want.

This link now has more solutions in it for those who may still be dealing with color/display problems.

http://blog.macuyiko.com/2009/07/solving-color-problem-red-grass-purple.html

I'm using Windows 7 on an iMac with Boot Camp. I had the colors issue where some of the colors looked messed up. The following applies to both Fallout 1 and 2.

All I did was set my desktop to a solid color, right-click the .exe file and then in the Compatibility tab, I just put a checkmark next to "Run in 256 colors", "Run in 640x480 screen resolution", and "Run this program as an administrator".

I find that if all these are checked and my desktop is a solid color, the color issue goes away. No other options need to be checked, for me. If I leave any of those three unchecked, or if I don't set my background to a solid color, the issue returns.

There is no need for me to leave the Screen Resolution window open as someone else suggested, although that does work without checking any of those options I believe.