Might be preaching to the choir here, but this is something that caused me a little trouble recently. Today for the first time since I purchase an nVidia GTX 275 I decided to play Quake and Quake II. Sadly both GLQuake and Quake II crashed on startup. Steam does not let you run them in compatibility mode either so I was not about to try that. After a bit of searching I have found the solution and thought I should share.
First, I had to download the latest nVidia drivers. I previously had a 196.something driver and one of the options I'll mention is not included in that version. I'm now running version 197.13
Anyway. Install Quake and Quake II, then access the nVidia control panel. Navigate to "3D Settings" -> "Manage 3D settings" in the menu on the left. Then select the "Program Settings" tab. Now Quake II should be listed in the drop down list, but you'll have to click "Add" and find the GLQuake.exe in your Steam directory.
For both programs change "Extension Limit" to On and "Multi-display/mixed-GPU acceleration" to Single display performance mode. It's important you don't change the "Extension Limit" to On in the global settings as it will prevent some modern games from running. Screenshot
Ta-da. You now will be able to run both games with no problems. Happy days.
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