Thought i'd make a single post to list these two tips for Windows 7 users.

If the game crashes when you hit ESC to exit the options screen and/or you get an error when trying to save your pilot:
1.) Right-click the shortcut for launching the game
2.) Select Properties
3.) Click the Compatibility tab
4.) Check the box: Run this program as an administrator
5.) Click OK

If you want to use the "S_HOST=CASTLE" cheat:
1.) Hold the Windows key on your keyboard and press the Pause/Break key
2.) Click the text link at the upper-left: "Advanced system settings"
3.) Click the Environment Variables button
4.) Click the New... button
5.) Set the Variable name to: S_HOST
6.) Set the Variable value to: CASTLE
7.) Click OK

Well, I'm not denigrating your experiences, but I just installed the GOG version of the game on Win7 64-bit, and played all the way through, and had nary any issue; I didn't need compatibility mode, and I didn't need to run as administrator. Just FYI...

I have Win7 32-bit and I have experienced the same issues as patrickjarvi. It could be the difference in OS bit version or it could just be a difference in security defaults. I set the Run as Administrator option and now it saves games without error.