I want to share my experience in case it helps anyone else.
I am a great Oblivion fan and I looked forward to Fallout 3 very much. When I got a copy and installed it I found that it was grossly unstable. The BEST I managed was about 60 seconds of game running between crash (or freeze). It seems that I had ALL of the issues discussed at length on many forums. I spent days and days reading forums and trying to fix it. The problem was that many of the 'fixes' break other applications, and I have literally hundreds of Apps installed. Many of the postings are rather poor and people just guessing in the dark!. Eventually I accidentally messed up my machine completely trying to get Fallout working and had to recover from a backup - a tedious process.
I almost gave up in disgust, but by this stage just getting it running had become a significant challenge just in itself, since I am deeply technical, and (sadly) like this sort of thing. I was also goaded by all of the reviews saying what a great game it is (and they are right!).
I have a powerful system, with quad-core 2.6 Ghz AMD, 2Gb RAM and a nVidia GeForce GTX 460 1Gb Graphics Card. Windows XP Pro. Power should not be an issue.
In the end I got Fallout 3 to work flawlessly - literally hours of running between crashes.
How? - I created a new partition just for Fallout 3 - I installed Windows XP Pro (SP2) onto that partition, creating a dual-boot machine. On this new Windows instance I ONLY installed CPU drivers, graphics drivers, and Fallout 3. It worked perfectly first time, and I am very much enjoying it now.
In this new instance of Windows, just for playing Fallout 3, I disable network connections and so I don't need anti-virus. I also have not enabled Windows update.
This is not an easy solution, and I am not going to tell you how to do all this, but the message is that it did work perfectly for me!

I was also determined to get it working om my high-spec machine (and I finally did ... see http://www.gamesas.com/index.php?/topic/1187018-fallout-3-goty-controls-and-game-freeze/ ).

I also thought about trying your solution, but I have some devices that I don't think I would be able to find XP-32 drivers for. Also, Virtualization is out because I have yet to find a Free VM that plays Direct-X games fully.

I read your thread - very interesting.

I did try creating a VMWare virtual machine (using the free version), but that did not work. I could not install the graphics card drivers within the virtual machine. I am guessing this is generally not possible without some graphics-card-specific virtual drivers which some how wrap the real driver.

I also considered buying/finding a spare machine just for Fallout 3 experiments but couldn't find one of the right spec apart from possibly my wife's machine - the one machine in my house I do not dare touch in case I fall from favour

However I am assuming you would get the same result if you dual-boot Windows 7. At least you have a sand-box you can then experiment in without any impact on your normal configuration. Fallout 3 does appear to work if you ONLY install what comes off the disk!

As a side note - Oblivion worked fine until I installed Fallout 3 and then Oblivion also started freezing/crashing. Ha!

I tried getting Oracle VirtualBox going (for a different Direct-X 9 game a while back) almost but no cigar (at lease for me).

Un-necessarility touching wife's machine ? Are you crazy ? :wacko:

Funny, I do have a real dual-boot of Win-7 and I call it "SandBox". I haven't used it in a long time. I think I have demonstrated it's not really a Win7-64 problem ... FO3 works fine on my C2D laptop and my main i7 system.

I'm not sure how accurate this is, but several problems point to the audio/music/codec system.
http://www.gamingnewslink.com/2008/11/07/fallout-3-patch-10015-download-and-patch-changes/

i have several same effect wit my machine...i got a quad core i5 lynnfield (2.8ghz but overclocked to 3.33ghz) 8gbram...Nvidia GTX 460...my pc is worth 4000$ in total n brand spankin new n game ....keeps freezing in middle of action or just randomly....it never crashed but mostly freeze n i play any othe rkind of game easily wit graph at max n never lagged,...fallout 3 game of the year edition pack i have is kinda....sad :/ cant play at all like i used to wit my dual core...can a high speed pc make this game crash?????

With a few simple tweaks ... runs great for me on this:

Intel Core i7-930 Quad (2.8 Ghz – 8 Threads - with TurboBoost)
12 gigs ddr3-1333 Ram
ATI Radeon HD-5870
Realtek HD-Audio ALC888s (on-board)
WD 1tb 7200rpm (Black) HDD
Dell 24" UltraSharp u2410 LCD
Windows 7 Ultimate 64-bit

well i got 64 bit also plus i got a 42" plasma tv n even a heat sink n everything is tweaked...this is my only game i have hard time playing ok (not in laggy or graph,those r ok) cuz i even play WOW or COD in super graph n everything to the max...it does no effect but fallout 3 is my fav game n it had to be that one that [censored]s up lolz why not some other game instead? lolz