Thank you! I remebered I had played this as a child on Windows 3.x

Yes, Petzold's examples used a certain style to illustrate the use of the Windows API as clearly as possible. Petzold programs would have a giant switch statement handling WndProc messages, state would be held in tons of global variables, and everything crammed in to one huge file. Great for showing a concept and demonstrating how something works, not so good for developing a maintainable, reliable piece of software.

Either the one from Microsoft or another from that era had multiple colors of cells, and an option to play competitively where before each generation you could add one cell of your color. Whether it was actually "fun" is another question.

I like this idea too and would love to see someone have a crack at it! But I think reaction-diffusion would be a nicer type of automaton/solver to use since it can just look a lot nicer and less aliasy (I have a huge soft spot for GOL of course, but it's so discrete and aliasy when you can see individual cells! And even all the cell-transitions are essentially instant too!)

Reaction-diffusion can definitely do complex life-like behaviour and plenty of other fascinating things! (Rob Munafo's Uskate-World being a great example!) And here's a YT vid of an experimental RD sim that I made a while back to illustrate:

https://youtu.be/W6sO8ZkgU9s?si=gGeZwX0ueYOFiKiD

My wife once did the same in VisualBasic. The cells were buttons. Small but fun.