RealMyst seems to be ignoring the setup configuration on my XP. I've tried changing resolutions, inverting mouse, etc, and nothing works. The game will run (besides one freeze), but it's very jumpy and appears to be skipping quite a lot of frames, which makes it hard to try and play.
My problem sounds a lot like what I've seen on VIsta/Windows 7 topics, but most of those have been fixed by running as administrator. I don't think that's possible with XP, unless I've missed something. Running under compatibility mode does nothing besides make the game load slower.

Well normally in XP if your the only user you will be the admin anyway but if you share your computer its possible to have an admin account and lesser user accounts.
What you can check though is that the config file or the folder the config file is in are not set to read only. Right click on each and go to properties and then make sure the read only box isn't ticked.

I actually am the administrator for my machine, as it's the only profile. However, I did try what you said, and sure enough, the INIT folder was read-only. I changed that, and the file WIN_INIT seems to be changing some of choices made through the Setup.
However, it would not change the screen resolution still. I have 1280x1024 checked on the setup, and I even placed it manually in the WIN_INIT file, but it still runs as 800x600. It's not game breaking, as the game seems to be running decently now, but it would be nice to change resolutions.