The game works great for me, but I do still have a couple of questions:

D3D: Whichever config setting I try, I can only switch between software and glide2. Did GOG disable D3D support entirely due to compatibility issues or am I missing something?

EAX: any way to tell if it works (via Alchemy)?

A general nglide question (as I am just not familiar with the program): where does nglide store it's settings? Are these global or game-specific? And do they always overrule whatever settings the game has?
-> edit: according to Zeus software on their forum: "nGlide settings are stored in windows registry. Configuration is global for all games (location of the configurator doesn't matter)."

And finally: what's up with options.ini? It says "Player Configuration File for Lands of Lore III." :)

Yup, you hit it right on the mark. I have no idea, best is to try it out yourself. As far as I know (I don't have the GOG version of this game) GOG supplies the game with nGlide but without the configurator. If so, what you can do is go to Zeus Software and download the latest version of nGlide and install it so you have configuration options. The only thing you have to do is rename glide2x.dll to glide2x.dll.bak in the Powerslide folder to avoid possible version conflicts. Again, I have no idea.

Just did. I guess it works, sounds more spatial, but the sound is crackly (with -nopollsound either checked or unchecked in Powerslide's Config utiltiy). I'll futz with the Alchemy settings to see if I can improve things...
-> edit: buffers: 4, duration: 15 seems to work fine for me (-nopollsound not checked). Thanks for the info! Seems GOG did include the configurator and it works; running at 1600x1200 now.

@GOG: I noticed the game has two entries in W7/64's uninstall list. Which is which?

I'm suffering crackly audio as well :/

What are these "buffers" and "duration" options? Are they options for your sound drivers, or something in Powerslide?

Good tip about high-res. Now that I've sorted out my frame rates by unsetting the vertical sync option, I see my video card will run this smoothly at 1920x1080 :) That rocks!!

I also noticed that Lands of Lore III file. What's up with that, GOG?

I had no sound issues with the out-of-the-box GOG version.

I'm not sure which OS, audio hardware and drivers you are using, but following the instructions from Powerslide's own config utility, you should UNcheck -nopollsound (which was checked by default) ONLY if you have native EAX support.

As I am using Windows 7 with a Creative X-fi sound card, I use a program alled 'Alchemy' to emulate EAX (which Windows 7 no longer supports). That's where the buffers and duration settings come in to play. If you have specific questions about that, let me know.

And just to be sure, the engine sounds of the cars DO have a certain popping or crackling 'muffler sound' in them by design. Check out a YouTube video or listen if the starting sounds do sound clear to make sure there is indeed a problem.

I installed the nGlide Wrapper from Zeus Software, but can't figure out how to get a higher resolution. I used the nglide_config.exe file that was installed to the Powerslide folder and I set the resolution to 1680x1050, but when I launch the game it still has the lower resolution (800x600). Is there something else that needs to be done so the higher resolutions will work with an nVidia card?

Update:
I got it to work. It looks like nGlide can only affect the game in gameplay mode, but does not change the lower resolution menu screens.