It didn't work on my real Mac . I got the same flickering dialog.

While I was at it (at trying my System 6 disk, not at the Mac ), I thought I'd try the 6 finder with system 7. It started up, of course, and the finder opened, but then as soon as it displayed a dialog, it went into the same flickering state as before. I couldn't even read the message, because the Mac didn't draw it!

So I'm thinking it's something to do with the dialogs?