Note: On Windows 7 you MUST allow yourself to access these files as by default Windows 7 will NOT allow you to modify anything under Program Files. Just go to properties on the gamesas folder, uncheck the read only box. Then go to security and give yourself (users) FULL CONTROL.
Edit the following file in Notepad. Be careful not to save it as ddraw.ini.txt... notepad may try to add the .txt extension for you !!! select All Files from the dropdown list when saving to avoid this.
DDRAW.INI
Look for the section in the file as follows:
;XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
[Graphics]
;Set to 0 for 8 bit fullscreen
;Set to 4 for dx9 fullscreen
;Set to 5 for dx9 windowed
;dx9 modes cause some corruption of movies
;A dx9 mode is required for any graphics related script extender functions to work (i.e. fullscreen shaders)
;Modes 1, 2 and 3 are no longer supported
Mode=0
Now, change "Mode=" to "Mode-4".
Save the file and start the game normally.
Your "odd color" problems will go away!
PS You can also change the RESOLUTION of the game in this file as well. use at your own risk though! Changing resolution to something like 1024x768 will make it look better on most LCD monitors, however, it WILL cause issues with the VIDEO files contained in the game.
Enjoy.