Sorry for reviving an old thread,but reading trough it,i couldn't find a sollution for my problem.
I'm having the same issue that has been addressed on the beggining,past the load screen,the game hangs (at the part where it says something like Francis INTL,1992).It won't go any further than that.
I'm running it on Windows XP SP3 (that's probably why the win7 fixes did nothing..)
I also am not using the steam version,have admin rights and did everything the readme told me to do.
..That's what i was going to say as i was posting this,but i have found a way to fix it (for myself,at least),and decided to post it since more people may be having the same problem.
So here is the problem: The readme tells you to rename the model set to gta3 and put it on the models folder.The problem is,there is already a gta3 file there,BUT,it's a .IMG file. To make it work,simply backup the original gta3.img file there,and swap for the gta3 file you want (gta3 reimu,marisa,etc),AND add ".img" at the end of the file name.Not sure of what it fixes,but it worked fine after i did that.