alexw11: I recently installed Windows 8.1 and had some significant issues with IWD2 I managed to solve, and I thought I would share here. This may not work for everyone, and it is also possible that you may never encounter the issues I have, but I hope I can help someone else out there.

It seems Win 8/8.1 has lost some Direct Draw support that Windows 7 still retained. My previous experience on Windows 7 was a crash on launch, but could be solved simply - running "setup-ddrawfix.exe" in the IWD2 folder and switching from WineD3D to Force Direct Draw Emulation worked great. This wasn't the case anymore on Windows 8.1.

After installing 8.1, I still had a crash on launch using WineD3D, but now using Direct Draw Emulation results in a flashing cursor and open windows on the desktop flashing on the screen while playing, as well slowing down the game, even in the menus. The only way the game was playable was uninstalling ddrawfix, but this introduced the classic error of having the edges of the fog of war being mirrored the wrong way.

The solution was this: http://bitpatch.com/ddwrapper.html
Made by the same guy that made ddraw fix. After uninstalling ddrawfix (run setup-ddrawfix.exe and type u and hit enter) , extract the contents of "ddwrapper.zip" to your game's installation folder and open "aqrit.cfg". Change BltMirror = 0, to BltMirror = 1. Run the game. The fog of war will now display correctly and game was playable for me, with no crashing or flashing. I later installed the high resolution mod and a gui replacement without issues. Running at 1920x1080. It seems like it might be giving me the slightest performance drop when using this resolution (compared to without the ddwrapper), but it is not really noticeable (although I have yet to test during a fight with a lot of spell effects). Running at standard resolution is indistinguishable.

Notes:
I am running an Nvidia GTX670 using the 340.52 drivers and Windows 8.1 Pro x64 fully updated (as of this post), along with a Core i7 - 3770k overclocked to 4GHz.. I can't guarantee the same results for other configurations, and I do not take any responsibility for damages to your system by following my advice. Use at your own risk.