Robert Gault remembers more about the game than I do, though changing your refresh rate might help if it's set to something other than 60Hz. From Robert's post, there's a problem with certain video drivers so they don't set the resolution correctly and even changing the game's configuration file doesn't help.
If you want to try compatibility mode, you probably want to try Win 95, Win 98, Win NT 4.0, and maybe Win 2000 compatibilities to see if any of them make a difference. There's probably no point in choosing any compatibility newer than those, even though the box lists XP as compatible. Also disable visual themes and advanced text services on the compatibility tab if you see them listed.
Are you using XP or something else?