Good to hear you've found a good solution to many problems.
The difficulty with getting Grim Fandango working on newer machines worries me more and more, especially now with Windows Vista. I'm glad people like yourself are looking into relatively simple ways to sort it out. The only better thing would seem to be dual booting (not very convenient).
Even better would be if Microsoft made a freeware version of Windows 98. It's totally obsolete, but would help a lot of compatibility problems.
will have a thorough technical section to address ongoing issues with the game, and if you come up with a good guide for this I'll be sure to include it.