This is a post that will hopefully help others who found themselves in a situation similar to mine when I first tried running Desperadoes in Windows 7. I have an Nvidia GTX 260M graphics card in my Asus laptop with a Core 2 Duo P8700 and 6 gigs ram.

The installation went fine, but when I tried running the game, the resolution would not work properly, and the colors were rainbowy. I've fixed this problem before with compatibility settings, but this time no go.

I finally manually set the resolution to 4:3, and everything is fine. I updated the shortcut thusly:

"C:\Program Files (x86)\GOG.com\Desperados Wanted Dead or Alive\Game\game.exe" 1440 1080 32 60

Now, the game starts automatically in a 4:3 resolution and runs like a dream.

I hope this helps.