Seems like a frequent issue with this game running on newer graphics drivers.
http://forums.steampowered.com/forums/showthread.php?t=2979733
I recall Risk II (best game I ever got from a cereal box) being really finnicky when I installed on windows 7. It had to be running on 1280x768 or lower resolution or it would crash, and the avi files hated my computer, so I needed a '-noavi' flag to run it. Old games are particularly prone to these compatibility issues. Sacred outright refuses to run on 64-bit systems. Not even an error message. Just a message from the design team that they don't think it can run. 64-bit is backwards compatible (Program Files x86, etc.)....
Odds are, the solution is to change your resolution. If that doesn't fix the issue, try out the patch.