The palette problem was already eradicated starting with Windows 8. Stopping explorer.exe is a popular trick on Windows 7 from my understanding, someone also made a program that suspends Explorer, achieving the same effect (don't know why it also mentions Windows 8 and Windows 10, didn't see the problem on these systems). Quite radical workarounds IMO. There's article on PCGamingWiki about this particular problem.
There's also a registry tweak applying some special DirectDraw compatibility flag that might be useful on older OSes, but its effectiveness is limited; alt-tabbing out of the game will undo its effect and the same will happen if the game switches to different video mode at some point. There appears to be at least one more not understood factor affecting it. That's the observed behavior Windows Vista/7 under usual circumstances. On Vista however, you can just leave one Explorer window opened to prevent colors from getting messed up.
Not sure about XP, I remember seeing that problem in the past in Interstate '76 menus when starting it in Glide mode (menus still use DirectDraw), tested Sanitarium demo recently and it looks fine there.