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Well you are running with very little memory.
I would shut the antivirus down, those things are horrible for causing conflicts.

What patch version of the game are you playing?

Some other stuff to try:

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) Update your Windows, update your Video card drivers and audio card drivers. Then repeat steps 1-3.
 
What patch are you using?
 
I am asking what patch you are using now.
 
Sorry, I missed the patch info in post 5.

I would go ahead and install the beta patch, I know there was some problems with one of the 1.4 versions. But it could just be a memory problem.
 
Well in general you should never ever think about down grading your DirectX.

I am really suprised you say the version of DX on the CD is DX7, that is very old.

The direct X you should have on your system is 9.0C

In general you always want the latest version.

Regarding your virus protection.

Well those programs are horrible and notorious for causing problems with installs and the running of games.
 
Glad it worked out.