Here's his post:
After reading a bunch about this issue, looking around at my steam install, and trying various tips, I believe I have the solution for running Railroad Tycoon 3- and when you are done, you will be running it WITH the steam client (and steam-supplied executable). So that means you can show all your Steam Friends how COOL you are as you play a 2004 game about trains. WOOT!
The Quick Answer
Basically, there is a Configuration Setting that you can apply- "Disable Hardware T&L". When this is applied, whatever illegal instructions are being sent to the Video Card stop being sent, and you can play the game. Simple, right? Except for the fact that changing this config requires you to get INTO the game, and past the main menu.
1) Go to gamecopyworld.com and search for Railroad Tycoon 3.
2) Find the 1.03 executable and download it.
3) Rename the RT3.exe file YOU JUST DOWNLOADED to something like ConfigUtil.exe
4) Copy ConfigUtil.exe to the Steam RRT3 directory.
5) Now run ConfigUtil.exe as an administrator.
(Note: Most tips so far have stopped here and had people playing the game using the 1.03 executable which doesn't have the steam features or the bug fixes that came with 1.04 and 1.05.)
6) Go into the Settings --> Graphics menu and find the option for "Disable Hardware T&L". Select it. You'll get a dialogue talking about how this might impact performance, etc. It's ok, your fancy futuristic gfx card and CPU (by this game's ancient standards) can absorb the hit.
7) Exit the game- er, ConfigUtil- and start normally through steam. (If you were troubleshooting and running any -s# options in the advanced tab, you should clear these first).
If anyone wants to try this with a version other than the one from Steam, or even with a version from Steam, to verify that it works, I'll add the 1.03 patch to the archives here, along with the instructions on how to do it.
For those interested, you can follow the thread here.