Are you certain that the rom is a good rom? Scan it with GoodN64 and see if it recognises it. (See the Misc. download section, search for GoodN64)
Try changing the video plugins and see what happens. You may need to upgrade your Direct X and/or video card drivers.
Does this happen with every N64 emulator or just Project64? Test with 1964 to see if it happens there too. If so, this may also confirm if it is a bad rom.