The answer to ALL your prayers!!! (hopefully)

Ya'll need to get in touch with a program called PowerStrip. (You can get it at download.com) It allows for totally dymanic tweaking of virtually every commercially viable video card on the market (and them some). I've used it to get Windows XP running on my arcade monitor with no gimics or tricks.
It supports individual tweaking of hsync, vysnc, and well... just about everything. It provides on option for interlacing (depending on your video card). It won't perform miracles, and only works as well as your video card. I'm blessed with a Matrox G400 (just happenned to be what I had already) so it works well for me. For instance, if your video card does not support interlacing then you will not be given the option to interlace.
I haven't tweaked any games to actually run in Windows yet, because I really wanted to use DOS... But that may be the easier option. There is minimal flicker, but that would be due to the interlace. When you use a frontend such as Game Launcher you don't even notice. I've noticed the flicker comes from thin horizontal lines, little words, and very detailed backgrounds.
When I tried running Street Fighter EX2 Plus in Zinc in Windows in played for a few moments and locked the computer. Moral of the story... avoid 3D if you're already taxing the video card. I imagine running DVD's would probably act wierd, though I haven't tried it (I don't even own a dvd drive. That belongs in the living room hooked up to the tv anyways.) And anything that requires changing the video mode is obviously going to probably give problems too (since you're already using a video mode that works).
At any rate, I got 800X600 interlaced working. The program has built-in settings, but I didn't find them useful. Had to tweak my own which may have been why it was so fussy. I'll probably drop down to a lower resolution to try to avoid the thin-line flicker, but I'll worry about it later.
Here's a tip I've found to come in real handy, though... Get your hands on a second video card (any cheapo card will do). Now BEFORE you install the computer in your cabinet, install PowerStrip on your computer. It will auto-detect your video card. Then shut it down and drop in the second (cheapo) video card. You'll have to switch your monitor over in the back because it will detect the cheapo card as the default...
NOW hook up your good card to the arcade monitor. Windows will allow you to view both screens at once and Power Strip will let detect the new card as well. You can use your regular monitor to visually configure the arcade monitor one step at a time. Then when it's perfect... turn the sucker off and remove the cheapo card. Windows will default BACK to the good card and PowerStrip will have saved your tweaked arcade monitor settings. You're good to go!!! (hope that wasn't too much)
Ok ok ok I'll shut up already. Hope this helps out. I know there are very few resources online for getting arcade video on Win200 or WinXP... Come to think of it... I haven't seen any at all. But this site inspired me and I did some homework on it. Though I would tell the world...
AND BE LOOKING FOR MY PROJECT SUBMISSION WHEN I GET IT ALL FINISHED!!!
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AlanS17 (AlanS17@msn.com)