Here's how _I_ got POD to work under Win2K and WinXP
First, software mode, the easiest. Make a full or full MMX install (remember to disable DX and Indeo checks in the installer). Enable Win95 compat mode on podmmx.exe (v22.214.171.124). In Win2k you'll need to make a shortcut and enable compat mode on that one. If the compatability tab is not there, enable it by typing "regsvr32 %systemroot%\apppatch\slayerui.dll" on the Start->Run prompt. To unregister type "regsvr32 /u %systemroot%\apppatch\slayerui.dll" without quotes. If compat mode is NOT enabled, trying to run podmmx.exe will just cause it to crash. However if it IS enabled, all you have to do is click about 40 times or press and hold Enter till the access violation message box disappears. It'll start up normally (you might get the codec warning but it can be ignored) and when you're in the "messed up" menu press Alt+Enter to go to windowed mode. From there proceed to play.
To get Hardware accelerated graphics you'll have to patch the game first, of course. My GFX card is a Geforce2MX and I tried both with old (12.90) and fairly new drivers (40.72WHQL) under Win2k but there was no difference. The patch I used was updatePOD21_d3d-dx5.exe. Install it and enable Win9x compatability mode for the resulting wpodd3d5.exe (v126.96.36.199).
Now comes the real tricky part. REMOVE the POD CD from your drive and put in a DIFFERENT CD instead (any will do). Now start wpodd3d5 and wait till it pops back to the desktop with the "Insert POD CD" message. Replace the one in the drive with the POD CD and WAIT TILL THE DRIVE SPINS UP PROPERLY before proceeding to click OK on the message box. If you don't wait or the drive does not spin up it means that Windows hasn't detected the diskchange, and the application has locked up the drive even if you keep clicking on the OK button. The same thing will occur if you start without any CD in the drive, that's why the swapping method is required, just to make Windows aware of the disk change and stealing the focus back, because when I started with the correct CD POD would simply crash after a few seconds.
Part two, even trickier. If the CD swapping part went OK you should be seeing the the menu screen with the "hand" pointer in the upper left corner and your normal mouse pointer somewhere. To gain mouse focus tap Enter, then Space or vice versa (I forget, sorry). This part took me a couple minutes to figure out and it may cause the game to crash. If it goes well and you have regained mouse control you can proceed as normal. Alas, now comes the disappointing bit. The graphics look shit, ie there is no texturing (or is it blending gone wrong?) anyway, everything is shades of grey and white, including the cars, except that shading seems to work. I didn't bother testing this for too long, but I'm no expert and this wasn't a beautiful sight to behold. It would be interesting to know if this also happens under Win9x or if using an older DX version (6 or 7 maybe, I was using 8.1) would make a difference, or even using a different GFX card (ATI or Matrox).
Finally, I also tried running updatePOD21_3dfx.exe patch over it and added OpenGlide, and to be sure it would start up (making the whole CD swapping mess unnecessary) but it would just sit there with a greenish screen that went darker and brighter every now and then, but I could hear game sound going fine, which leads me to believe that 3DfX could be a viable option. Unfortunately I don't have time to try it out with a real card at the moment. BTW, the OpenGlid.err log was full of invalid operations.
So if anyone has success getting around those issues, either by setting up QFixApp and enabling the right options (half the time I'm clueless as to what they mean) or by using a different GFX card or DX version, please post. And sorry if for some of you part of the info above is redundant, I just wanted to make it as comprehensible and complete as possible.