Not Solved, I have the same issues running this game on windows 7. nothing works so far
if you alt tab you see the screen, but the cursor still doesnt work
I've found that if you disable any additional monitor(s) so you're left with one, then set the remaining monitor to a low resolution (say 1027x768) and 16 bit color, the game will run.
Hardly a solution, though. That's a royal PITA to do just to play a game for a while.
It also doesn't seem to like 16:9 resolutions, so you should expect it to look fairly distorted on a wide-screen.