Run 3DConfig in Win98/Me compatibility mode to create a config.ini, then run the F1C exe in Win98/Me compatibility so it can use that config.ini. You do not need to edit the INI file at all using this method, just use the config tool to set resolution, etc.
I do recommend setting anisotropic filtering to 16x (if your system can run it) and antialiasing to 8x (again, if your system can) in a video card profile, not in the sim, as it will greatly improve the visuals in the low resolutions available.