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[NOTE: I am running Windows 7.]
Navigate to the following folder: "C:\Program Files (x86)\Steam\steamapps\common\Dungeon Siege 1".
Right-click "DungeonSiege.exe".
Left-click “Properties”.
Left-click “Compatibility”.
Check the following boxes...
"Run this program in compatibility mode for: Windows XP (Service Pack 2)".
"Disable visual themes".
"Disable desktop composition".
"Run this program as an administrator".
Clos the properties window for "DungeonSiege.exe".
Right-click "DSVideoConfig.exe".
Left-click "Run as administrator".
Select your video driver - (the one without TnL).
Select "Complex Shadows".
Left-click OK.
Right-click "DungeonSiege.ini".
Left-click "Edit".
Modify the width, height, and bpp values as desired (I set mine to width = 1920 height = 1080 bpp = 32)
Copy the top four lines of this file into your clipboard.
Save the file, and then close out of it.
If you are already logged on with a Windows admin account, while doing all of this, then you can do the next step via "C:\%homepath%\Documents\Dungeon Siege". Otherwise, you'll need to navigate to "C:\Users\Administrator\Documents\Dungeon Siege". Once you've figured out whether or not your current user account is an admin account, or not, and you're in the correct Documents\Dungeon Siege folder, proceed to the next step.
Right-click "DungeonSiege.ini".
Left-click "Edit".
Replace anything above [multiplayer], by pasting those four lines you previously copied into this file.
Save the file, and then close out of it.
Bring up you Steam library.
Search for Dungeon Siege.
Right-click "Dungeon Siege".
Left-click "Properties".
Uncheck "Enable the Steam Overlay while in-game".
Uncheck "User Desktop Game Theatre while SteamVR is active".
Close out of the Properties window for Dungeon Siege.
Launch the game.
Enter your admin password if prompted.
If you get the "This program has known compatibility issues" prompt, check the box at the bottom of the prompt that says "Don't show this message again".
Left-click "Run program".
If you get the "The requested display mode 1920x1080x32 is unsupported" prompt, like I do everytime I initially run the game, don't worry, just click OK.
Enjoy!
I'm really liking this game though. It's hard to believe it was released 20 years ago. I am now in the Eastern swamp and boy, some of the fights there are tough especially when Hydracks and other swamp creatures hit on your party at the same time. If it wasn't for Merik with his healing hands/wind spells, my party would be regular dead meat. On the plus side, my two melee tanks, two archers, combat magic mage and nature magic mage (plus two packmules) are levelling up really fast now with all the xp gained by clearing the swamp before I go down into the goblin mines.
https://steamcommunity.com/sharedfiles/filedetails/?id=2223706294
I tried the steps in this guide too but it didn't help remove it entirely. I continued playing.
And I tried so many different things, compatibility mode, simple shadows, etc.
But the only thing that really worked was downloading something called dgVoodoo 2.
Here's the download (I picked dgVoodoo v2.75.1 )
http://dege.freeweb.hu/dgVoodoo2/dgVoodoo2/
Use these instructions http://dege.freeweb.hu/dgVoodoo2/QuickGuide/
Hope it works!