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Okay let's try some standard things.
1) Make sure you have the latest patch for the game.
2) Rename the AVI folder to AVI_back
3) Set the color depth to 16BIT
4) Turn off everything in the background like E-mail/ICQ/Messenger, Virus protection and everything in the system tray beside the clock.
5) Run a Virus check and a Adware/Spybot checker
6) Update your Windows, update your Video card drivers and audio card drivers. Then repeat steps 1-4.
 
Okay, but make a new post so I will know you have updated.
 
I never lock threads unless there is a problem of going Off Topic.
Let me know how th etest goes.
 
Please run a DirectX Diagnostic:
Start menu –Run - then type Dxdiag, then select each tab across the top of the window, and run the tests on each tab. Then select “Save All Information” button in the lower right of the window. This will bring up a dialog box to allow you to select a name for the file where the information will be saved. You can save it right on the desktop as this will make it easy to find. Then copy the contents of that file from the start to the heading that says “DirectX components” then paste what you have copied into a post in this thread.
 
Okay first thing I notice is you did not perform step 6, your video driver is WAY out of date, it is more than a year old. That is ancient for drivers.
 
Let me know if that does not work for you, you can run another Dxdiag and verify it install correctly, Latest Patch is Feb 9,2006.
 
You don't, so that is not an issue, if you did not have the version you have now it would have been the fist thing I asked you to update to.