Running windows 7 x64:

Is there a way to run in a windowed mode or make for a smoother alt-tab?

Audio stutters/crackles a little?

The font kinda bleeds into itself not sure if this is something that is problem within the game itself or something with graphics card...

There just seems to be a lot of problems with this game right now, I saw that last night on my girlfriends computer that there was no laggy mouse/ audio malfunctions/ and could run hardware mode. I'm starting to think it has something to do with AMD GPU's and this game. Nvidia so far seems to be working fine. Anyways a lot of the audio problems seem to stem from using software mode, if this is in fact what you are using. Which if so, may I also assume you have an AMD based GPU?

Nope Intel core 2 duo and Nvidia 8600 GT

The game doesn't like new hardware (yes, 8600GT is too new, as is my GTS250 ;).There is an old trick to deal with graphical glitches in Populous 3:
1. Open console by pressing Tab+F11 in-game (not in menu)
2. Type "BYRNE" to enable cheat mode
3. Press and hold "o" (oh, not zero)
4. Scroll to option 59 (non-filtered texture blah blah blah) using up/downarrow keys (while still holding "o")
5. Change value from 0 to 2 with left/right keys
6. Glitches should be gone. The downside is you have to repeat it every time you load a level :/

OR use this handy tool:
http://www.tedtycoon.co.uk/wiki/PopEnhance

It lets you choose a number of patches/enhancements including a resolution fix and a texture fix. Downside - need to run Populous through it :/ I thought GOG release would somehow incorporate all the fixes, unfortunately it's the first time I am a bit disappointed with the GOG version...