So I tried out IXS in an XP virtual machine, and received some very interesting results. The game runs almost perfectly; great frame rate, and all the 3-D is displayed correctly... except the character models. The inhabitants of LEGO Island all have some sort of disease now.
As you can see, the models have no textures, and are either flat minifigs or are missing a torso. It switches between the two. The latter is rather interesting, as the legs are still a 3-D object, and still hop around when the character walks -- it's just that both legs move in the same direction, looking rather silly.
This occurred in Windows XP running in VMware Player on a Windows 7 host. What's REALLY interesting is that I had previously installed this on other virtualization software (VMLite) and got different results still. In THAT VM, all the 3D was correct, even the character models, but none of the text would show up, meaning I had to navigate menus by memory and no subtitles or anything would appear. I'm not sure which version I would consider more playable. For me, I would prefer the no-text version as I already know how to play the game, but for others it might be an issue. I'm not sure what the point of this post is. I don't have a solution to the problem. But I can say,
"Lair, if you would like to play IXS on your computer, this might be the best way to do it, and you can choose for yourself if you'd rather have no text or glitched characters."