A bout of nostalgia hits me when I found my old LOTR royal edition cd set. When I couldn't get it to work, I discovered it available on GOG and purchased it. The GOG version works, unfortunately, it hangs randomly and crash prone. I'm currently resorting to save at end of every turn to avoid losing progress.

Anyone else experience frequent crashing with LOTR (cd version)? What can I do to reduce the frequenty and/or fix the crashes?

Hard to say what causes the crashes, as they're random. Here's GOG's general help on crashes, maybe one of the suggestions makes the game more stable on your system:
http://www.gog.com/support/lords_of_the_realm_royal_edition/crashing_in_general

I tried installing dx 2010 as well as the newest direct-x as instructed on that page. That seems to reduce the frequency of crashing down from every turn to every a few turns. The freezes never truly stopped though.

Have you tried running it in compatibility mode and with admin rights, yet?
Right-click the games shortcut, select Properties and go to the Compatibility tab. Check the option to run the program as an administrator and try different compatibility modes, starting with Windows XP.

Yep, CD Version still freezes regularly.

I tried LOTR DOS version on a whim, and surprisingly, it doesn't crash! So I'll stick with that version for now.

Good! Thanks for letting us know.