I'm running RealMYST with Windows XP SP2 compatibility, pretty much installed today. I can click on the Myst book and link to Myst island, but the keyboard and mouse controls simply don't work. I CAN go onto the Escape menu, but when I load a save it crashes when the bar is around halfway.

The game is known to be unstable on modern systems.
Try running realMYSTSetup.exe and choosing a video card that doesn't support T&L. Keep the compatibility settings you already chose for the game executable.