Also, if you find you are having lag during space combat, try turning off your video card and restart. Device manager, disable video card, restart computer... it's an ancient game and don't need no fancy 3Dness.
This is an old game, I had the same problem on my new laptop. Tried everything, ended up turning off my video card under device manager, restart, works just fine. It's a pain each time I wanna play, but works flawless now.