Crash on Startup to Partial Black Screen

When I start the game it crashes to a black box which takes up about 3/4 of my screen. It appears as if the game is attempting to resize my screen to a smaller size because of monitor flickering. I can still see my desktop icons around the right and bottom edge of this box.

I have already tried to remove the prefs.ini file with no luck. The game worked before updating to Version 1.2.

Debug Message: Version v1.2 last updated on: Mon Jun 12 18:04:26 2006
Debug Message: *********DXDiag info follows.*********
System Info
Time: 8/10/2006, 03:35:10
DirectX Version: DirectX 9.0c (4.09.0000.0904)
Machine Name: DOWNSTAIRS
Operating System: Windows XP Professional (5.1, Build 2600) Service Pack 2 (2600.xpsp_sp2_gdr.050301-1519)
Languages: English (Regional Setting: English)
System Manufacturer: synergio
System Model: n/a
BIOS: Award Medallion BIOS v6.0
Processor: Intel(R) Pentium(R) 4 CPU 1700MHz
Physical Memory: 768MB RAM
Page File: 458MB used, 2266MB available
Windows Dir: C:\WINDOWS


Display Info
Display device 1:
Device Name: \\.\DISPLAY1
Card Name: RADEON 9800 XT
Manufacturer: ATI Technologies Inc.
Chip Type: RADEON 9800 XT AGP (0x4E4A)
DAC Type: Internal DAC(400MHz)
Key Device: Enum\PCI\VEN_1002&DEV_4E4A&SUBSYS_00021002&REV_00
Display Memory: 128.0 MB
Current Display Mode: 1920 x 1440 (32 bit) (60Hz)
Monitor Name: Cornerstone p1500
Monitor Max Resolution: 1600,1280
Driver Name: ati2dvag.dll
Driver Version: 6.14.0010.6626
Driver Date: 7/18/2006 22:58:29
DirectX Acceleration Enabled: Yes

Display device 2:
Device Name: \\.\DISPLAY2
Card Name: RADEON 9800 XT - Secondary
Manufacturer: ATI Technologies Inc.
Chip Type: RADEON 9800 XT Secondary AGP (0x4E6A)
DAC Type: Internal DAC(400MHz)
Key Device: Enum\PCI\VEN_1002&DEV_4E6A&SUBSYS_00031002&REV_00
Display Memory: 128.0 MB
Current Display Mode: 1280 x 1024 (32 bit) (60Hz)
Monitor Name: Philips 107S (107S2)
Monitor Max Resolution: 1280,1024
Driver Name: ati2dvag.dll
Driver Version: 6.14.0010.6626
Driver Date: 7/18/2006 22:58:29
DirectX Acceleration Enabled: Yes



Sound info
Sound device 1:
Description: SB Audigy 2 ZS Audio [B800]
Default Sound Playback: Yes
Default Voice Playback: Yes
Hardware ID: PCI\VEN_1102&DEV_0004&SUBSYS_20021102&REV_04
Manufacturer ID: 1
Product ID: 100
Driver Name: ctaud2k.sys
Provider: Creative
Driver Version: 5.12.0001.1164
Driver Date: 12/8/2005 11:55:46
Type: WDM
Other Drivers:
Acceleration Level: 3
Cap Flags: 0
Min/Max Sample Rate: 0, 0

Sound device 1:
Description: Bluetooth Audio
Default Sound Playback: No
Default Voice Playback: No
Hardware ID: {95C7A0A0-3094-11D7-A202-00508B9D7D5A}\BTAUDIO
Manufacturer ID: 1
Product ID: 100
Driver Name: btaudio.sys
Provider: WIDCOMM Inc.
Driver Version: 1.04.0002.0008
Driver Date: 7/1/2003 12:19:20
Type: WDM
Other Drivers:
Acceleration Level: 3
Cap Flags: 0
Min/Max Sample Rate: 0, 0

Sound device 1:
Description: Plantronics Headset
Default Sound Playback: No
Default Voice Playback: No
Hardware ID: USB\Vid_047f&Pid_0ca1&Rev_0004&MI_00
Manufacturer ID: 65535
Product ID: 65535
Driver Name: usbaudio.sys
Provider: Microsoft
Driver Version: 5.01.2600.2180
Driver Date: 8/4/2004 02:07:55
Type: WDM
Other Drivers:
Acceleration Level: 3
Cap Flags: 0
Min/Max Sample Rate: 0, 0



Debug Message: *********END dxdiag info.*********
Debug Message: Entering WinMain
Debug Message: ******* Starting Game Shell *******
Debug Message: Going Fullscreen
Debug Message: Preparing to change display settings.
Debug Message: Using multilsample setting: D3DMULTISAMPLE_NONE
Debug Message: Could not create the render device using default format. Switching to 16bit
Debug Message: Using multilsample setting: D3DMULTISAMPLE_NONE
Debug Message: Could not create the render device.
Debug Message: InitializeDirect3D Failed.
Debug Message: Now Fullscreen
Debug Message: Shell initialization complete
Debug Message: WM_CLOSE message received.
Debug Message: GameUninitialize start