Frogness, you did the right things to advance/complete that question in particular, as the Galvanized Bovine suggested I also think your game is severely bugged. Best thing I can suggest is to uninstall the game, reinstall fresh, then install these two patches:

v1.2 http://www.teamx.ru/cgi-bin/load.cgi.../fallup12w.rar

v1.3 "unofficial" http://www.teamx.ru/cgi-bin/load.cgi...s/fallup13.rar

I know your game says v1.2, but I found that when I installed FO2 from my DVD (I think we have the same thing, white label), it said it was patched but it really wasn't, so I suggest you manually install both of the above no matter what.

As to your graphics issues, that's hit and miss as far as I can tell. I have an AMD/Nvidia 6800/XP Pro SP2 machine and it's always worked fine for me, no matter what. People with ATI cards have reported problems. Give this a read here, might help you out: http://www.nma-fallout.com/forum/viewtopic.php?t=5061

Good luck!