Well after toying around with it for while I finally got it to work last night. Recently I bought the Fallout Trilogy and noticed that the only two games that didn't have the rainbow graphics glitch were the HD version of Fallout 1 and Tactics. So after playing with the f1_res.ini I was able to fix it by changing the main section to this:
[MAIN]
#################################################################################################### ##############
# if AUTO_SCRN_SIZE = 0 - Screen Width and Height are set with SCR_WIDTH & SCR_HEIGHT.
# if AUTO_SCRN_SIZE = 1 - Screen Width and Height are set to current desktop resolution.
AUTO_SCRN_SIZE = 0
#Set the screen resolution here
SCR_WIDTH = 640
SCR_HEIGHT = 480
#Set the number of colours here
# 8 for 8bit(original)
# 16 for 16bit colour(loading screens don't show in this mode)
COLOUR_BITS = 16
For Fallout 2 I was able to do the same thing by installing the HD pack here:
No Mutants Allowed :: Files
and changing the Main section in the f2_res.ini to this:
[MAIN]
;################################################################################################### ###############
;Set the screen resolution here
SCR_WIDTH=640
SCR_HEIGHT=480
;Set the number of colours here
; 8 for 8bit(original)
; 16 for 16bit colour (set only if your not using Sfall with graphics modes 4 or 5)
COLOUR_BITS=16
;Position of the Hi-Res Settings Button in the Main-Menu: valid positions are 1-7.
HI_RES_BUTTON_POS=5
Hope this helps you guys get these amazing games to work correctly.