Every time I launch the game, it freezes when I get to the main menu. The mouse cursor moves, but I can't select anything and no keys respond. I have to close the game with Task Manager. I looked around and found several people saying to install Nvidia PhysX Legacy version, so I did that. Unfortunately, that didn't help, unless I somehow did it wrong.
Any ideas on what I can do here?

Hi, not sure if this is the problem but instead of clicking with mouse button, try just pushing the enter key... maybe it's just windows firewall in background asking for allowing or not TW internet access.
Also when it's freezed, you can try ALT+TAB to see if there are some other program that are working background freezing TW (or just ALT+TAB to go to desktop, and ALT+TAB to go back to TW).
If this doesn't solve the problem, try posting your configuration and we'll see!

Depending on your hardware, but have you tried running the games 'TwoWorlds_RADEON.exe'(Radeon 9600 Compatibility Mode)? I'm not sure what the difference is between this and the normal games setup, but it might work.

*note: I only have a Steam copy to go by so the .exe could be named differently.

I have the GOG version and I can confirm that the name is correct! ;)