This article is from the ZTerm FAQ, by Les Jones email@example.com with numerous contributions by others.
1. Select Terminal Settings for that service and choose the PC ANSI
BBS radio button.
2. Also in the Terminal Settings dialog, uncheck the "No Extended
Characters (Strip hi bit)" box if it's checked.
3. In the Color Preferences dialog, check the Use Color box.
4. In the Terminal Preferences dialog, set the font size to 9 or 12
point. Other sizes will not display ANSI graphics.
5. In the Monitors control panel, set the monitor depth to 256
colors or higher. 16 colors will do in a pinch. If you normally use
16 color video, I recommend using Jon Snell's ZTerm High Speed
Patch, which installs a 16 color palette into ZTerm.
6. ZTerm 1.0b only: in Terminal settings, select Terminal Font.