Whenever I launch this game without FRAPS it appears to play just fine, I've played it for about five minutes and haven't had any issues. But whenever I launch it with FRAPS, which I need to do to record it, it immediately goes "rainbow" on me once I reach the main menu. How can I fix this?

I have the same problem. I just stopped using Fraps and game works fine.
ps
i7-GTX960-Win 10

All games that use directx 8/8.1 on windows 10 (all versions of windows 10) are launched in a forced borderless mode...

this game use nglide as default but nglide is not updated on gog

download 1.05 version of nglide (don't run .exe files, you need to run 7zip and extract all files in game folder)

don't use direct3d, use glide mode