Before we begin, let's go over a couple things to minimize confusion. Firstly, this is a workaround for people with Windows 7 64 bit computers. I couldn't tell you if this works for ANYTHING else at all, be it TFTD, 32 bit, or other OS's. Next, I did relatively extensive-ish searching and could find no such soulution in this forum. There were, however, at least 3 or 4 unanswered cries for help. Most of said looking was done in the FAQ section (here), where I've found zero evidence. If a duplicate exists somewhere else that I missed, feel free to take whatever actions you see fit. Lastly, I'm making this because this took me way too long to figure out for what seemed to me to be an obvious answer in the end. Also, with such an amazing game I believe that this problem may begin popping up more and more (with people who already own the game, anyways) as computers are upgraded from that little tiny Win95 or Amiga down in some corner of our basement. Now that that's over with, let's begin.
Ok, so real quick, let's answer why this happens. As far as I understand (I may be a tad off on this) DirectDraw Acceleration has to be turned off on newer computers to get this game to function properly. Win7 uses DirectDraw to help display it's GUI (taskbars and such), so, because it's embedded into the OS, it's a nasty bugger to get working using DirectDraw. However, thanks to this great community, the fix for this problem's been here for quite some time, and is pretty easy to do. This is probably dumbed down further than most of all you coders need, assuming you don't already know this stuff, but I'm willing to elaborate on anything that's unclear.
All you'll need is UFOExtender, but I'll include steps in the instructions for people who are using it with X-COMUtil, because I do myself. Remember that a clean install is always the best way to start off. Also, this shouldn't screw up your saves, but back them and everything else up, as always.
Step 1: Go into UFOExtender's config file, UFOExtender.ini in your game directory.
Step 2: The following settings should be taken note of. Note: The find function is your friend! Skip Intro: I'm a laaaazy bugger and just can't handle that extra click to skip the intro I've seen a million times. But it looks like it's a sacrifice we'll have to make because it seems to cause a crash. Nextly, cursor clipping. That needs to be on. Scale cursor's 0 should be changed to a 1 also. This can create a slow mouse in some instances, but you can change your Windows mouse settings in the Control Panel if it's an issue, which will make it go faster ingame. If it isn't turned on, it appears that the cursor can still leave the right and bottom edges of the screen in menus and the Geoscape. And lastly in this config file you must change D3D from 0 to 1, and this is THE MOST IMPORTANT CHANGE. The others have really been for smoother playability. This is the real game-changer (see what I did there? ). What this does is makes the game use Direct3D instead of DirectDraw, skirting the issue until we have swirly whirly whizzy-tizzy changing takbars or something that require D3D. But that shouldn't happen for a while. If you don't use X-COMUtil, you should be finished.
Step 3: Run X-COMUtil. I haven't done a TON of experimenting, but I've found a couple of things that should have a certain value. As far as I can tell everything else can stay the same as defaults or whatever you choose. Firstly, you have to split the .exe. Really though, why would you even have this utility if you didn't use that? When it asks about the patch program, say yes here, but when it actually opens the program at the end say no so that it uninstalls itself (which is what it does when you say no at the end), because I'm assuming that if you're here, you've already tried installing this. Next, I originally played some of the older versions, so I wanted the original sound effects for geoscape and tactical. These seem to make the sound mess up, so it seems you have to turn it off, but any way to fix that would be appreciated. So say no to those two for now. Everything else stays the same as whatever you use AS FAR AS I KNOW. I say "n" to most things in there, however, and haven't had a huge amount of time to experiment. The only one I could MAYBE see issues with is if you don't fix all of the issues when it asks all, none or prompt on the bugfixes bit.
Step 4: Probably the easiest. Run the game by double clicking "runxcom.bat". The game should work now, barring any very strange settings or something. As always, the more background programs closed, the higher chance it will work.
Ok, so again, any inquiries and I'll do my best to answer. I'm pretty familiar with most of the ins and outs of this program and these two tools, in general, but try to keep in mind that this is my first new topic, I think only about my 7th post (though I have lurked about these forums for a while), and I'm not the person who made either one of these tools, so I'm not totally omnipotent. But I'll give you a shot and get back as soon as I can.