Yeah, I was able to play it on Windows 7. Not only does it fix compatibility issues, but I think it even makes the graphics look a bit better too. As well as just fixing some bugs. Prior to that there was still a work around to get it to work..but it would still have bugs like sometimes the game would just suddenly minimize itself for no reason and then when you maximized it again the screen would be very dark.
I always liked this version of Kain. He's throwing out energy bolts and shit. Has items that can slow down time, has powers to flay people and all this other stuff. But by Defiance all he really has is..telekinesis. I realize the reason for this is the time travel shenanigans, but I liked when Kain had a lot more options at his disposal. Also BO1 was a lot less linear.
I just found it cool you could kill an enemy and suck its blood and gain back health..and then you could leave and come back later and murder the enemies ghost and suck on it's..ectoplasm or whatever to regain magic. Kain won't just eat you he will eat your spirit as well.
But here is one site:
http://www.thelostworlds.net/Software/Blood_Omen_PC_Patch_for_XP_and_Vista.html
I know it says its only for Windows XP and Vista, but it works for Windows 7 too.
Though I suppose you could also just download a playstation 1 emulator and the rom and play it on there too.