Here's a link to the system shock 2 forum.
http://www.ttlg.com/forums/showthread.php?t=60930#gf2
They have a list of different fixes for different problems. The one you want is labeled "My GeForce 2 shows psychadelic colors when I use the psi-amp / enter a radiated area" (should be right up at the top of your screen when you hit that link). Usually, it's cause by using an NVidia driver that was way too advanced, so you have to downgrade a bit.
Don't worry, it's easy and safe, and they have a link right to the driver you need.
I know, because System Shock 2 is one of my favorite games. If you get it working, tell me. Maybe we can set up a 'net game sometime.