First thing I can tell you is that the game does work on Windows 7 (I have it also), which isn't bad considering the game is over 10 years old. Next check what resolution your monitor is running at. If it is higher than 60 Hz, set it to 60 and try again. May be a couple of other things to try, but let's try the resolution first.
The second screen shot is perfectly normal for most games, just put a check where it says "Don't show me this again".