Curiously, it works fine for me under XP. I don't know what could be wrong.
Have you tried DOSBox? It is guaranteed to have a slowdown effect 😀

[EDIT]: It's been a long day. Balls of Steel is native Windows 95; you might have trouble with it in DOSBox.

Have you tried the slowdown feature in Abandon Loader?

According to Atari's Support page:

PLEASE NOTE THE FOLLOWING IF YOU ARE TRYING TO RUN THIS GAME UNDER WINDOWS XP. THIS PATCH IS REQUIRED FOR THE GAME TO WORK!

A patch has been released for Balls of Steel that will upgrade your game version to 1.3. This version adds the following features to the game:

* Key selection in the menu for flipper, plunger, and nudge.
* A fix to permit extra ball awarding in Arcade mode.
* A fix for Duke extra ball dotpanel display sequencing.
* A fix to prevent Enter skipping highscore entry until highscore title shown. Increased maximum capping and adjustment for Powerball enabling.
* A fix for 2-ball jackpot totaling in Firestorm.
* A video driver update for problems with Matrox Mystique and Riva cards.
* A fix for problems with cards based on Rendition chips.
* A fix for problems using Video Setup button after installation.
* A fix to allow single-screen view only on video cards less than 1Mb.
* Automatic resetting of display profile if video options changed in menu.
* An extra utility that will allow you to reprofile your video card should you run into trouble, or change video drivers, etc.

Have you tried to use the extra utility mentioned above to see if reprofiling might help?

Also, I have seen some discussion in 3D Realms forums that the latest Wildfire downloads of two of the tables from Balls of Steel have been tweaked for Windows XP. You might download those tables and see if they work.

Good Luck!

Thanks guys for trying to be helpful! Your suggestions didn't help me but finally I managed to solve the trouble with this game!

I visited 3d Realms forum and found that few guys had the same problem with Windows XP. Unfortunately the hints they got didn't solve anything (I already use 1.3 version). One guy wrote how to check if your game is running too fast. I did it and made sure, that my game runs 25% too fast.
Then I realised that maybe monitor refreshing rate has something to do with that. I ran Regedit and found following entry:
HKEY_LOCAL_MACHINE\SOFTWARE\Wildfire Studios\Balls of Steel\Display profile
Refresh rate in that entry was 63Hz, so I changed it to 85Hz (this is the one I always use). Afterwards I ran the game but it was still too fast, so again I checked registry entry - refresh rate was reset to 63Hz, I changed it to 70, game reset it again (it seems BoS doesn't work with higher refresh rates). So the only solution is to lower refresh rate of monitor. I did that and - SUCCESS!!! Balls of Steel runs with normal speed!
It seems that 70Hz works the best (just a little too fast, but it's not a problem anymore), 60Hz is a little jerky.

Also, I have seen some discussion in 3D Realms forums that the latest Wildfire downloads of two of the tables from Balls of Steel have been tweaked for Windows XP.

Actually one of these tables was included in original Balls of Steel, another one (Devil's Island) is new to me but it costs 15$ and I can't download demo (I get some error).