My algorithm to play this game (the hard way :D)
1. Install Recovery CD through VMware to physical empty HDD.
2. Switch in arcade PC's bios the sata controller to IDE legacy (or compatible) mode.
3. Boot from nfs hdd without CD, wait until Windows finish their installation process.
4. Install every driver for the system. Most important parts are video and sound cards. Your hardware should have windows xp drivers.
5. Install two disks with game.
After this steps everything works for me. But there are 99% that you may fail at it due to hardware incompatibilities and I don't know how to help here.
I've tested this method on three configurations:
1. Biostar A780L m/b, AMD Athlon II X3 460, Geforce GT430. Everything works.
2. ASUS H61M-C m/b, Intel Core i5-3450, Intel integrated graphics. I have GTX750 for this machine but this card don't have drivers for XP SP1. So switched to Intel video. Everything works.
3. Intel DH67CF m/b, Intel Core i5-2550k. No luck with this system. Freeze at Windows installation.
All setups are little aged for today. At all systems I have to use PS/2 mouse at the beginning because USB will be available with installed chipset drivers.
On the video you can see how it works: