Ok, so all of the stories about how incomprehensibly hard the race track portion of the FairPlay mission are true. What compounds this frustration is that option the skip the race doesn't work.

When you click the skip race option in the ingame menu, it shows you the race results and then brings you to the "You Failed" screen where it gibes you the option to retry or go to the main menu.

Is anyone else having this problem, and is there a solution?

Yup, exactly as hard as I remember it was in my old days.
The option "skip race" is to use to get it over with when it becomes clear I couldn't win that time to avoid waiting until the end of the time.
Use the start to get ahead of the group, learn perfectly when all curves come, and don't take them too fast to avoid using control of the car.
If you still can't beat it like that, put it into extra easy mode (other cars won't ram into yours anymore), put damages off (so even if you roll over you won't die), get ahead of the group in the initial straight part of the track and take all curves at 70/80mph or lower, in a few tries you should be able to make it

i did manage to win it on easy with damage off. It took me a while but it was relatively WAY easier than the way it was.

The biggest thing that kept me from losing was fishtailing so I ignored passing the other cars and just concentrated on not losing control, going slow on certain turns. The race ends on a straightaway so eventually I was able to slam on the gas and pass the last car at the very end without any fear of crashing.

I know that there are two missions affected by high frame rate (Exploding Celeste and Bridge Bombing Zeppelin) that make them impossible (to do them you have to cap to something like 15-20 frames per second). Is there a possibility that the difficulty of this race is also affected by high frame rate?

No, the problem with this mission is the invisible wings that Ralph put on the car, because he was told he needed to make sure you flew down the race track. I'm still trying to figure out how the hell he hid them, but if you can break them off, you're golden.

The worst experience I had with 'Fairplay' was when I only got 2nd although I finished first. There is an invisible finish line a few meters before the visible finish line...

Guys, trust me, you need a steering wheel for this part of the game. At the time I bought a Logitech Formula Force GP for this and I managaed to win the race at my first attempt. Other than this, the entire game is far more fun. You get better controll and is hust like you are playing a different game.
As a side and fun note, I'm still playing today with the same wheel :D

I've recorded a winning race on extreme difficult, with manual shifting. As I said, I used a Wingman Formula Force GP. With such device win the race is definitely possible.

https://youtu.be/N760v-gcBnY

Is there anyway to use a joy stick. I did this with the original game on a disk and that was the only way I could win the race and then it was fun,