Greetings!
There are applications that let emulate a virtual machine in which you can install any OS. I only know about
vmware, however it is a commercial one

. You will have networking available so that sounds like a good solution to me. I remember running win95 in a virtual machine which I used to teardrop from my actual linux box whenever i got annoyed!
Mind you however that security flaws do exist in game servers. For example one version of Q2 had a nasty buffer overflow bug that made it possible for an attacker to even gain root privileges. So it's a good idea to secure it as best as you can.
About chrooting the server application, I found this somewhere on the net (unfortunately it was in German so I'll try to translate it (bear with me

)):
# Download source and compile:
cd /usr/local/src
wget
http://www.gsyc.inf.uc3m.es/~assman/...ail_1.9.tar.gz
tar xzf jail_1.9.tar.gz
cd jail_1-9_stable/src
make
make install
# create chroot environment:
/usr/local/bin/mkjailenv /var/chroot
/usr/local/bin/addjailsw /var/chroot
# create a new user:
/root/confixx/confixx_useradd.pl -h /var/chroot -p password (encrypted) -g users -s /usr/local/bin/jail chrootuser1
# add system user to the chroot environment:
/usr/local/bin/addjailuser /var/chroot /home/chrootuser1 /bin/bash chrootuser1
# Add additional applications to the chroot environment:
/usr/local/bin/addjailsw /var/chroot -P <programname>
I didn't test this myself but it was in a thread called 'Chroot mini-HOWTO' in a game server specific forum, so I hope this will help you somehow.
Good luck!