LIke many have tried running Resident Evil 2 to on Windows XP I've had a great deal of trouble. Here are my solutions to overcoming the issues. All of this is based off forums I've visited.
Issue: Screwed up graphics. E.g. 2D backgrounds have black borders and 3D graphics not correct
This really depends on your graphics cards. I have an Nvidia card which works well with old games. Generally, try setting the graphics in the options to Voodoo or try it with different settings.
Issue: Game runs slowly
Not sure why this fixes it, but try running windows media player or classic media player if you have it. While its minimised, try running the game.
Issue: Game won't save and load
If you're trying to save and load games you MUST set the save directory to c:\RESIDENT EVIL2 which is the default apparently. Spacing is important as well. This is something to do with the way data is stored in Windows XP. Otherwise, the game won't recognise your save games.
Issue: Finished the game and now trying scenario B using the other character but movies and items are incorrect
If you've finished the game using one character, you will be prompted to save and when you load that save you will get to see the other character's version of the events.
Here's how I got around it:
1) You need to install the data of the other person's disc and run the game from the other person's disc. So insert the other person's disc and make sure the data is installed.
2) Next you need create a shortcut for the game to run it in Windows 95 Comtability. You need to use the shortcut from the CD. Navigate to the regis director and copy the short to the desktop, then from your desktop right click, go to the compatibility tab and select windows 95 mode. This step may or may not be required.
3) Run the game using the other person's disc. E.g. if you are playing Scenario B Leon, you must use the Leon CD. It should work now.
Issue: Game runs okay and then everything starts to slow down after some time playing. Also dying sequences and sequences with lights are fire are slow.
I think this has something to do with the way the 3D calculations are run when creating the 3D graphics. Try restarting the game. Unfortunately, I haven't really found a way around glowing lights or dying sequences being slow.
Some other things I've noticed:
Continuity - Scenario B puzzles and items don't match with Scenario A puzzles. E.g. you unlock the same doors/puzzles with the same keys/items in Scenario A. If indeed the other character was running around unlocking all the doors like in Scenario then these doors/puzzles wouldn't be locked/solved. This was clearly done to ensure there was actual gameplay in scenario B. The cutscenes and events in Scenario B generally match up.
Unlocking the special scenarios - There are suppose to be 2 additional scenarios in the game, an extra game featuring HUNK an Umbrella Operative and Tofu but the requirements are insane to get them requiring you to finish the game within like 2 hours and under 10 saves. Ouch. Frankly it requires too much effort.