Installing and running this game on Windows 7/8 requires some work arounds, as the game was not designed for these new OS's. The game also needs some INI tweaks if you have a dual or multi-core processor even if you have XP. The tweaks are simple, and can be summed up as followed:

1. Change the install path (not required for XP)
2. Install the updated Games for Windows Live client (just for initial validation)
2. Make some simple ini changes
3. Avoid mods until you know the game works after leaving Vault 101.

Of course now, here is the wordy explanation so that you understand why these are needed.

Install Path and UAC

If you have Windows XP, then ignore the install path considerations, just let things happen where you normally put your games.

This game is best not installed in Program Files or Program Files (x86) under Windows 7/8 unless you disable Windows security. It's a UAC thing. It is much better that you create a directory called C:\Games, or similar, that is not controlled by the UAC. And then create folders in there to install all your older games to that. This will eliminate UAC issues on older games, and let you keep your system secure. You can disable the UAC and other stuff if you want, but that is not recommended.

So, for this game, install to C:\Games\Fallout 3 (or similar). I even have Steam installed C:\Games\Steam. This way, any older games that I get from Steam I can run and not have UAC get all upset. If you already have Steam installed in a similar non UAC directory, then you can let Steam install it where it wants.

If you choose to, here is how you would move Steam to a folder not controlled by the UAC. It's pretty easy.

https://support.steampowered.com/kb_article.php?ref=7418-YUBN-8129

Games For Windows Live

The Games for Windows Live that ships with FO3 is outdated and no longer works. Get the latest Games for Windows Marketplace Client from the link below and install it (if you bought the game from Steam, that version still requires it). That should fix you right up.

http://www.xbox.com/en-US/live/pc/downloadclient

Note, you do not have to create a GFWL account, or even log in. The install scripts just want to see this installed. Once it is initialized GFWL does not ever have to run. I don't think GFWL even runs during first boot of the game, but it may set itself to launch with Windows. So you might want to stop that in MSCONFIG Start Up.

INI File Changes

After installing, launch the game through Steam until you get to the Launcher window where you can choose your Video Options and Data Files. Choose your options, you can change them later, your just giving the game a reason to create the ini files. After making these and other changes you might want, exit out of the launcher without launching the game. Now you should have some ini and Prefs files to work with. If not, then try to launch the game, and exit out as soon as you have a choice to, and then you will have the files for sure:

For Keyboard/Mouse users, in the Fallout Prefs files, located in my Documents/My Games/Fallout 3, find the following line and make it look like this,

bGamePadRumble=0

Otherwise you may have massive stutter when you move around. Of course, if your using a controller, you may want to leave rumble on.

Open up the fallout.ini file in: My Documents\My Games\Fallout3

Find the line:

bUseThreadedAI=0

change it to:

bUseThreadedAI=1

Add another line after the one you just changed and insert:

iNumHWThreads=2

The first line allows the game to use multiple cores, and the second line you add limits the game to 2 cores and prevents the engine bug from causing the game to freeze.

Note, sometimes the game will overwrite the derived ini files in My Games. Like after you validate the local cache. To make sure these changes are always in the game, you must also enter them in the root (where you installed it) directory Fallout_Default ini file. If you change the defaults before you launch the game, you can just launch the game the first time around as the derived files will already have the changes. Neat.

Important Note: If you hose the default ini, you will have to reinstall (re-validate?) the game. So, make a back up copy of the file first, just in case.

If your having mouse weirdness, then you can make these changes to tame the mouse acceleration. My Documents\My Games\Fallout3, in the INI file, make sure your Controls section looks like this the INI files.

You have to add the mouse stuff, the Always Run line is created by the game, leave it alone. (OK, the Always Run is a personal choice......

[Controls]
bAlwaysRunByDefault=1 (this is set by the game, leave it alone)
bBackground Mouse=0
bBackground Keyboard=1
fForegroundMouseAccelBase=0
fForegroundMouseAccelTop=0
fForegroundMouseBase=0
fForegroundMouseMult=0

You might want to carefully add these changes to the default ini also.

Mods, don't jump into them just yet.

Do not add any mods to the game until you have exited Vault 101 and been in the wasteland for an hour or two real time, at least until you have made it into Springdale. Not all the shaders and graphics are loaded until you exit the Tutorial and that will give you a couple of cell loads to verify game operation. Once you know the game is going to run stably, then you can add mods. Note, this initial unmodded character is perfect for testing mod mixes and new mods with. You will not mess up your main characters, and you will know if the mod mix is the problem or the mod mix with your save is the problem. Just never save over these first character slots, archive them if you have to. You can use the console to buff up the stats for higher level mods.

Mod Install

This is not the post to discuss how to install mods. Just keep in mind you are not adding content, you are adding or changing game code with mods. Mods need care and thought to be installed so they work together with the game. If your familiar with modding Oblivion, Skyrim, New Vegas, then the techniques are similar. The tools are even almost the same.

If you are not familiar with the basic use of FOMM or Wrye Bash for FO3 or BOSS, then please learn about those and good mod install practices before you install any mods. Start with this thread:

http://www.gamesas.com/topic/972878-fallout-3-mods-faq/