It's not a huge deal, but when playing this game I get this "flicker" in the graphics, red lights appear in the corners of edges in caves and the like, where the textures end.

Anyone else had this problem?

Yeah I have this issue too, it's pretty annoying :(
Not sure what I could do to fix it =/

play game in window 95 Compatibility mode

When I try it in Windows 95 compatibility mode my pc freezes up >.<
I've tried pretty much everything now, it's so frustrating.

Okay try it in all other modes

also download directx 9.0c for win 7 you are using Win 7 aren't you

Direct x Web Installer will update it from the web for you

Contact Support if this is still an issue.