Just a quick tip for those running Gabriel Knight 3 with an ATI graphics card. As mentioned here: The Sierra Help Pages, the game has clipping issues with hardware accelerated mode and ATI hardware.
The solution mentioned at the link above is to switch to software render mode. This works fine, but like most of you, I prefer hardware accelerated 3D. After fiddling with the in-game options, I was able to remove the clipping error by unchecking "incremental rendering" in the "advanced options" -> "Graphic Options" section.
It's nice to have the option of using hardware accelerated graphics again. I haven't had a lot of time to test this out yet, so there could be other issues, but hopefully this information will be useful to one of you.
My system: Windows 7 64-bit with ATI Catalyst 10.3.