I've finally got good old Creatures 3 running on Windows 7 64bit. A
thing previously said (and shown) to be impossible.
If you want to do this yourself, here's what I did:
1) Download and install Sandboxie (no need to restart after install).
2) Right-click setup.exe, go to properties. Enable compatibility mode,
set to Windows 2000 and run as admin. Close the properties window.
3) Right click setup.exe again, and select the new option, "run
sandboxed".
4) Install C3 as normal, except for...
4a) Ignore the popup window from sandboxie that asks you if you want
to restore files (but don't close said window, you NEED those files.)
5) When setup says you're done, click on "finish", and navigate to
Program Files (x86), create a new folder named "Creatures 3".
6) Ask sandboxie to restore all files. (click on the checkmark, then
restore in sandboxie's restore files window.)
7) when sandboxie finishes, go inside your new C3 directory and right-
click engine.exe, create a shortcut. Add "Creatures 3" onto the end of
the shortcut target.
8) Right click engine.exe, go to Properties. Enable compatibility mode
set to windows 2000, turn off high dpi and desktop composition so
Creatures 3 runs with the correct palette, and run as admin.
9) You're done! Now, whenever you want to play Creatures 3, open C3's
directory, right-click the shortcut, and select "run sandboxed". When
you're all done, you should have a shortcut and compatibility settings
looking like this:
http://img823.imageshack.us/img823/7742/ss20111001223800.png

Whoops. Turns out most of this is unnecessary. All you need to do is
run setup with compatibility mode set to Windows 2000.

Heh all you had to do was turn on compatibility mode for win98.