For me, the RTZ freeze was caused by a disc read error. (It could happen in multiple places, but that sign was SUPER common.) Try letting the computer sit for a minute or so while it's frozen and see if the screen flashes telling you there was an error reading drive D:. I tried my original disc, a burned copy of another disc image of the game, multiple CD-ROMs, multiple IDE cables, multiple power supplies, multiple ReelMagic cards (yes, I own two Maximas), multiple CD-ROM drivers, and all sorts of resource configurations. None fixed the issue, and that's why I bought another motherboard, assuming the problem was the IDE controller, and it fixed the issue for me. This is why I'm concerned about you having a similar freeze.
I just tried The Psychotron and those screens display fine without the pink keying issue you're having. (Edit: it's worth noting I'm playing the game on Win 3.1 and not a 9x OS.)
I've actually never heard of Entity and haven't seen it listed as a ReelMagic game at all. Of course, it's hard to find an actual list of these titles. Is there a page online about the game you can link me to or something? Google is only giving me results for a DOS sidescroller with no mentions anywhere of an MPEG version.