https://support.steampowered.com/kb_article.php?ref=8217-WJLC-9165

From the link above:

If you are having trouble running Fallout 3 on Windows 7 please do the following:

1. Navigate to your Fallout 3 folder (C:\Program Files\Steam\steamapps\common\fallout 3)
2. Right click on fallout3.exe
3. Click Properties
4. Click on the Compatibility tab
5. Check the box "Disable desktop composition"
6. Launch Fallout 3 from the .exe or from Steam

This worked brilliantly for me, and I could even run the game with both my monitors on at the same time, AND with all 6 cores going! Hope it works for those of you out there frustrated at not being able to play.

Awesome, I could not update my FO3 GOTY to 1.7, the patcher would always crash, and your fix did the trick!

This was on Windows 7 64-bit

I did apply the core fix though, maybe I'll try playing with full quad core later.

Thanks!