If memory serves, you absolutely need to have the Application Compatibility Toolkit to get this one to work in XP.
Here we are. Courtesy of ntcompatible.com (originally):
1. Download and install Microsoft's Application Compatibility Toolkit. Version 3.0 is available here (but Version 4 is out now too so maybe hunt the site and get that instead as it helps SP2 issues):
http://msdn.microsoft.com/downloads/list/appcomp.asp
[Actually version 5 is the latest version now - J]
2. Start the Compatbility Administrator Tool, a new database should have been created for you. Right-click on the database and give it a useful name "My Game Fixes" or similar.
3. Click "Fix".
4. Enter name "Extreme-G2" and vendor "Acclaim" then use "Browse..." to locate the "xg2pc.exe" file in the Extreme-G2 folder.
5. Click "Next >" on the Compatibility Modes page. 6. In the big drop-down list, check (tick) the box next to "IgnoreDebugOutput".
7. Click "Test Run..." to make sure game works! Then quit the game.
8. Click "Next >" on the Compatibility Fixes page.
9. Click "Finish" on the Matching Information page.
10. Use the "Save" button to save the database somewhere useful!
11. Once saved, click "File" then choose "Install" and the fix (plus any others you make in the database) will be installed so you do not need to use the Application Compatibility Toolkit to run the game in future!
12. In Control Panel>Add/Remove Programs the database you created will be listed. If you uninstall it the fixes will be removed.
13. Don't forget to set screen resolution/which graphics card to use in the shortcut (usually found on the Desktop when the game installs; otherwise follow the game's readme.txt file).