Ok, before I start I just wanna say ive done the searching and I read the sticky. I have tried compatability mode from windows 98 to xp(sp3) (it works on my old xp sp3 machine) and I cannot get rid of this rainbow glitch. 256 colours just makes the problem worse(even more shades are affected). I tried patching it but the latest patch I can find wont run on windows 7 64bit home premium and the old HD patch isnt up for download anymore (any other resolution patches wont work on vanilla f2).
while i haven't played this game yet, (planning on getting it soon) this happened to me with diablo ii. i looked online and found out that if you open up screen resolution by right clicking the desktop, and then leaving it running in the background while playing, it gets rid of the rainbow colors. don't ask me why it works, but it fixed my problem with diablo ii and its worth a try.
MS included Virtual PC free starting with Windows Vista for a reason.
I mean, really. I can't imagine why anyone would bother struggling to run Fallout 2 under Windows 7 natively when Microsoft provides a VM created specifically to support prior Windows versions, and provides it at no cost to the user, with regular updates.