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I recently installed the game and got the co8 patch. When I start the game in windowed mode it just hangs there and eventually says "not responding." I've wait for at least 20 minutes, but it never seems to work. I'm running win7. Thanks in advance for any help.
I think the windowed mode in ToEE was only used during development, it was never officially supported. Also it only works in 800x600 resolution.

What you can do however is to run the game fullscreen and then use D3DWindower to capture it in a window. Unfortunately I don't have ToEE installed, so I can't help you with the setup, but I found this tutorial http://www.youtube.com/watch?v=J-fyNeMZMqA.

From what I remember you only need to set the resolution, set the path to the DLL file (it comes with D3DWindower) and check the cursor clip option under Direct Input to capture the mouse cursor inside the window. I think the resolution attributes are switched, put width in height and vice versa.

The youtube tutorial has a download link in the description.
Thanks Jigby! That worked perfectly! Big ups!