There is a clear difference in image quality in Quake III Arena between Windows98/ME and Windows 2000. The best thing you can do is the following:
- Edit your video drivers so that you can play games at 85+Hz refresh rates or get a program called nvreffix.exe from fileplanet.com
- Type "seta r_intensity 1.6" and then "vid_restart" in your Quake III console
- Type "seta r_overbrightbits 0" in the console and then you can adjust your "brightness" higher
- Type "seta r_displayrefresh <xx>" in your console, xx being the higher the refresh rate as possible.
- Disable texture compression, as mentioned.
- You can also try "seta r_ignorehwgamma 1" in the console, but I do NOT recommend doing this command together with r_intensity, it will create an overbright picture that you will not like.
I hope these commands help - they did on this end. Nothing beats 98SE for games, though - but Windows 2000 is a much better operating system, and is worth the small troubles it causes [sometimes] in 3D games. Once SP2 is out a lot of these problems will probably be resolved.