Just my 2 cents... Copying the ddraw.dll from the Fallout 1 directory folder to the Fallout 2 directory folder has solved the problem for me as well. Simple, easy, done...

That's strange because I haven't noticed any color problems with Fallout. At least the problem has been solved for those of you that experienced it. Now I am more willing to go out and buy Fallout 2 once I'm finished with the first one.

I saw this solution online and it works for me without needing to modify anything.
1. Right click your desktop and click personalize
2. Click desktop background
3. In the "Picture location" dropdown, select Solid Colors and select whatever colour you would like to keep as your background.
4. Close every window opened
5. Right click your desktop and then keep "screen resolution" opened
6. Launched your game
I have no idea why it works but it works.

Just wanted to say, Flippyplip is absolutely correct. I don't know why it works but i did it and Fallout is running dreamily.
Thank you!

My God.... it actually works. Thanks so much..... but why the hell does this work?!

WOW this actually worked thanks!

Hello, I'm running Windows 7 x64 and the best solution to this problem in my opinion is to install sfall AND the high resolution patch, LEAVE the line as "mode = 0" in the the ddraw.ini file and CHANGE the line "COLOUR_BITS = 8" to "COLOUR_BITS = 16" in the f2_res.ini file. This will fix ALL the funky color problems and keep the movies from being messed up! This way you can enjoy the game in a higher resolution, not have the movies get all messed up, & no messed up colors.
Also don't forget to change the resolution in the f2_res.ini file to the resolution you want.

AJIGHH...
No patch or anything on the internets worked but this did O_o. You, sir, are some kind of magical wizard.

Thanks, vpbpi. Works great!
Here are the links for anyone who's too lazy to google :)
sfall: http://sourceforge.net/projects/sfall/
high res patch: http://www.nma-fallout.com/forum/viewtopic.php?t=42386

This worked for me as well - thanks.

I bought the game from GOG.com. Installed it. Installed the latest version of killdap's restoration mod, which included the high-res mod. Ran game. Perfect audio, no picture at all.
I extract the high-res files into the main Fallout folder. I then uninstall the high-res mod. I run game on Admin privileges. Perfect audio, picture looks inside out. Can't discern what the main looks like because it's too busy looking like confetti. I exit game.
I google solutions and try out all of them (I'm pretty sure) in this thread. The last try was clean installing, installing the restoration mod, and then sfall. I do the ini file thing.
Now, I get a error about not being able to load cities. I google that. I follow instructions. I run game again. It loads, but still no picture. I uninstall the high-res mod and the same color confetti greets me at the main menu.
I'm frustrated beyond all belief. I have directx 11 and I'm on Windows 7. For some odd reason the game won't let me run it on compatibility mode. I have an older machine (IBM ThinkCentre M50 series), but a Pentium 4, 2 CPU 3.00 GHZ, 4GB of Ram isn't that bad, right?
I've been searching and googling, but it's like a whole week later. Somehow, I feel that what finally works will be something stupid I've overlooked or missed. :-/
I always run as an Admin, but now I'll try installing it outside of the Program Files directory. :[

Copying the dll worked for me too.

Well that's strange, does vista have such problem with colors? If yes, than gog team didn't work on this game, and its incompatible with it.

Hello? Does this color problem exist on vista?

The problem seems to exist on Vista and higher.
But I found a great fix for all problems :)
first step: Download the killap patch 1.02.26
http://www.atomicgamer.com/files/85637/killaps-unofficial-fallout-2-patch-1-02-26-exe
Install it.
second step: install the High Resolution Pack 2.2c
http://www.nma-fallout.com/forum/dload.php?action=file&file_id=1295
Install it. (Extract it to the fallout2 directory and run f2_res_patcher.exe)
last step:
open ddraw.ini (in the fallout2 directory) and change line 55 to "Mode=4"
Like this one:
[Graphics]
;Set to 0 for 8 bit fullscreen
;Set to 4 for dx9 fullscreen
;Set to 5 for dx9 windowed
;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=4
---
Now everything is working fine for Vista, 7 and some versions of XP!
(Sorry if my english isn't so good...)