There are two workarounds to this:one requires you to limit your RAM usage via msconfig, the other is to "modify" the exe files for both the main game and expansion. Since I am not sure about linking anything on those forums, I encourage you to google for the second solution: you won't have to gimp your rig with the RAM limitation and both games run as intended post exe file edit. I managed to get them running in no time.
This hex edit fix is already included in the GOG version, that was the first thing I checked with a hex-editor, but still no go and I'm not going to edit msconfig and reboot every time I want to play this game. That should not be expected when buying it from GOG though, and it is said it is Win 7 ready. I've found a d3d9.dll that is supposed to fix this issue as well, but I am very reluctant to download these files from the wild.
Another thing, said on forums, is that 1.0 works but it is 1.2 that has these issues, And GOG version is 1.2. That being said, it is probably best to continue this in the thread I dedicated for this issue.