I'm no tech but the flickering sounds to me like a monitor refresh rate problem. Try fiddling with the refresh rate.
xlucidx: I have this problem as well but my rig is much different.
Here's my specs:
AMD Athlon XP 2800+ 2.4ghz
Geforce 7600GS 512mb
2gb ram
WIndows XP SP3
Oh and small hijack:
Age of Wonders 1 doesn't start at all, it just sits in the task manager doing nothing.
Probably unrelated but I get the problem that the program I start just sit in the task manager and I can't get to it on my Vista 64 bit system sometimes. Usually I don't bother solving the real problem and go for the quick solution of opening another program that fills the screen like for example maximised Firefox and then start the troublesome program.
Found that by accident and have no idéa why it works. Worth a shot anyway.