Did you tried overlay?

What hardware do you have?

Also, check if you need to update your video drivers.

I think my drivers are up to date. I'm running a Gericom laptop on a 2.2 Ghz processor and a SiS 650 graphics card.

I just got Daggerfall up and running on Dosbox, from very poor performance to actually being playable by tweaking this and that. Last thing I wanted to try is changing output from surface to something else, since someone mentioned that would result in greater performance.Unfortunatley, ddraw doesn't work, OpenGL is terrible and "Overlay" produces LSD-type funny colorful graphics.

OpenGL is slow on non NVIDIA cards, but the fact that neither overlay nor ddraw works for you is strange... Looks like your graphic card drivers are crap...
Somebody (gulikosa? - I am not certain now) makes builds with D3D support, so you can try them. Search. However seeing the kind of problems you have it is quite possible it will not work either...

Mirek

SiS is shit period. Don't expect anything decent from an SiS chip.

Don't be so hard. I had a SiS6326 sometime, and it was a pretty decent card with the best VESA support I have ever seen. Nowadays, you better get a GeForce or Radeon card, because I guess that SiS card may be an integrated (cheap) one. Correct me if I am wrong.

I get this "cant create ddraw surface" error whenever I choose ddraw output, and it switches back to surface. Why is that?

Well it's a problem with the SDL library. The version you're using hasn't been compiled "correctly". You have to get the source code and find this in src\video\windx5\SDL_dx5video.c:

1#if 0 /* FIXME: enable this when SDL consistently reports lost surfaces */

change it to

1#if 1 /* FIXME: enable this when SDL consistently reports lost surfaces */

and then recompile. If you can't compile it on your own I can do it for you.