When I first purchased Phantasmagoria a few years back, I couldn't get it to run either. At the time, I had a Pentium 2, 533 GHz, running Win98SE. I had exactly the same problem. I wrote to Sierra and here is the response I received.
"The problem you describe is likely the result of the installation program's inability to detect newer processors. Deleting the SIERRA.INI file and saying NO to the system test during install will resolve the issue. To do this:
Click the Start button on the taskbar, go to Find, and select Files or Folders. Type SIERRA.INI in the Named field, set the Look In field to C: (if the Sierra folder is on a different drive, change C to the letter of that drive), and click Find Now.
Click once on the name of the file that appears to highlight it. Press the Delete key on the keyboard and confirm the file deletion.
The computer must be restarted at this point.
When the system reboots, click the Start button and select Run. In the Open field, type X:\Setup (for X, substitute the letter of the CD-ROM drive) and click OK.
Click install on the Sierra installation screen. At the prompt to perform a system test, click NO, then ignore the system test results and click Yes to continue.
At this point the installation will proceed normally. When installing Sierra products in the future, saying NO to the system test will avoid the problem."
I now have a Pentium 4, 2.39GHz, running XP. The first game I played on it was Phantasmagoria. It's an annual event. I didn't have to delete any files because I said no to the system test the first time around. The game runs perfectly and I didn't need a slow down utility. BTW, Shivers runs perfectly also.