I don't know if it works for the demo, but you could try JJFFE, which is a VM for FFE.

Problem was corrupt registry, reinstall fixed it.

Game is not that old, but under WinXP i cant get it to scroll, which makes it unplayable. Have tried compatability modes and even vdms. I can get it to scroll in virtual pc, but the screen only updates when i switch between full screen and windowed. Anyone got a fix?

Have you tried using FreeSCI to play the games. AFAIK SCI0 is fully supported.

I have tried several different ways to get Goblin's Quest 3 CD version to work properly (Under WinXP) and no luck so far. Under a plain command prompt the speech is fragmented, the sfx corrupt, and doing any actions other than walking around (e.g. Pulling on a rope) make it lag like a very laggy …