I too have been struggling to get SH3 working on my new Win7 x64 PC.
As most have mentioned it works in 1024x768 if setup to run in window mode in the main.cfg file.
One thing I have found is if you edit your shortcut and set it to run Maximized (bottom of the shortcut tab in the shortcut's properties) it does run a stretched full screen. Just have to live with a title bar at the top of the screen.
I haven't seen this mentioned so thought I'd pass it on as a possible quick fix for other frustrated players.
SH5 is only $25 at the local EBGames... Is it as good as GWX3?
-kwm
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