2. When I tried to run the game, I encountered the above described freezes and audio stuttering. I found that setting the game's properties in Win XP's compatibility mode to: "Windows NT 4.0 (Service Pack 5)," and then setting the game's 3d Hardware Acceleration to "OFF" through the game's Options Menu provided the best results - although the freezes/stuttering continued. (Note: I tried running the game in both Windows 95 and Windows 98/ Windows ME compatibility modes, but both of these settings produced an inferior "scratchy" audio, and degraded video.)
3. More internet searching led me to a web page titled "Game Issues with Multiproccessor/ Hyperthreading Systems" at:
http://www16.brinkster.com/salvage/thief/darkengine.htm
I followed the instructions on this page for the "permanent way" to fix the problem (the temporary fix didn't work for me). This consisted of downloading imagecfg and unzipping it to the two folders specified; creating processor.bat per the instructions; saving processor.bat to the game directory; copying a backup of grimfandango.exe to a different directory (just in case); and then modifying grimfandango.exe in the game directory with processor.bat.
Once I did this the game ran like a charm - no hangs, no problems with any of the puzzles (although the elevator puzzle and the crane/chain puzzle were a bit "twitchy" - just the same as when I ran the game on my older systems). But the graphics, sound, and everything else was spectacular. I've kept the compatibility mode set to "Windows NT 4.0 (Service Pack 5)," and the hardware acceleration set to "OFF" in the game's Options Menu.
Hope this information helps anybody having problems running the game on their XP system. Good luck!