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Okay, so I've been having a lot of crashes on my win7 32-bit machine.So I decided to check what would happen if I started the game directly (sntrm.exe). The only problem I could notice was with the colors.

But this is easily solvable by editing registry (like with many old games). The first one is for a 32-bit system, the other for 64-bit. You can still get problems with colors on the intro movie, but after that all should be fine. Worth checking if you have problems.

Remember - editing registry if you don't know what you're doing is dangerous.

Windows Registry Editor Version 5.00

[HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\DirectDraw\Compatibility\Sanitarium]
"Flags"=hex:00,08,00,00
"Name"="Sntrm.exe"
"ID"=hex:14,c9,86,35


Windows Registry Editor Version 5.00

[HKEY_LOCAL_MACHINE\SOFTWARE\Wow6432Node\Microsoft\DirectDraw\Compatibility\Sanitarium]
"Flags"=hex:00,08,00,00
"Name"="Sntrm.exe"
"ID"=hex:14,c9,86,35
Thanks a bunch for this. Was having crashes with the GOG shortcut and had to use the .exe itself, which presented the usual colour issues. Easily fixed following what you outlined (64-bit, for the record). Still the colour issue with the intro as you said, but the game itself is clockwork.
My game keeps crashing within the first 10 mins of play and wanted to try this. Unfortunately when I used the Registry Editor I managed to get to \compatibility but can't find the Sanitarium folder? Do I have to move it there or something?

My version of windows 7 is 64-bit btw.
The registry hack for WIndows 7 worked for me! I only had 1 crash in about 3 hours of playing.
My game crashes alot. Which is really disappointing.

But its a great game nevertheless. I just have to save ALOT!
Sorry for the bump but I was curious to see if this would help my mouse issue (and possibly crashes too).

I searched that folder and it doesn't exist nor can I create those parameters manually. Could someone help me? I tried creating a .reg file then running it but it warned me about this only being possible if I created in the registry itself.
Here's how to fix it if you don't see the Sanitarium folder:
1) Open regedit
2) Navigate to the Compatibility folder (make sure you navigate to the correct one based on 32/64-bit)
3) Right-click the Compatibility folder > Click New Key
4) Name the key Sanitarium > Click the new folder
5) Right-click in some open space in the pane to the right > Click New Binary Value > Name the key Flags
6) Right-click on Flags > Click Modify Binary Data > Type 00 08 00 00 (you shouldn't need to type the spaces) > Click OK
7) Right-click in some open space > Click New String Value > Name the key Name
8) Right-click on Name > Click Modify > Type Sntrm.exe > Click OK
9) Right-click in some open space > Click New Binary Value > Name the key ID
10) RIght-click on ID > Click Modify Binary Data > Type 14 c9 86 35 > Click OK
11) Close regedit > Run Sanitarium using sntrm.exe in your GOG\Sanitarium folder!!

This fixed the crash I was experiencing during Hide & Seek!!!