Running an XP game on windows 7 (Zanzarah)

Hi all, recently I've had an itch to play one of my childhood games again. The name of the game is Zanzarah: The Hidden Portal. This game was designed for windows XP, and I had problems installing it on my windows 7 machine (installation gave an error at 96%). So I went onto the forums (which are pretty much dead) and found that other people had the same problem. There were two workarounds, one was to install a "windows emulator" and the other more simple method was to install it on an older system and then copy the files across to the new machine - which is what I did.

Now, the game runs fine for the most part, except that I have some wired graphical glitches:
Interiors are a bit messed up:

But when I "lock on" to a character to talk to them, they work fine:

Fairy-duel arenas have textures constantly disappearing and re-appearing: For those of you that don't know what that is, "fairy duels" are basically like Pokemon fighting each other, and the "arena" is the 3D location that they fight in

But when I press the pause button, for some reason they fix themselves:

But exteriors and everywhere else work fine:

So I think that the problem is that my graphics driver is "too new" for this game and not a windows compatibility problem. But what do you guys think? Is there something I could do to fix this problem?

I am running the game on compatibility mode with windows XP (service pack 3) and as an administrator, but that doesn't seem to change anything. Here are my system specs:

You can download XP Mode for Windows 7 from Windows site. That should fix the compatibility problems.

Here's what I've read on gog forums

you can install it on win 7 you just need the newest patch, i think its 1.008 or something like that and when you install start setup in compatibility mode xp and then you can start game normaly

Click to expand...

hmmm, the windows website says that xp mode is only for windows 7 ultimate, professional or enterprise. I have home premium unfortunately