Yep...try this:
1 - update your video drivers
2 - ensure running current release of DirectX9.0
3 - double check that your colour depth is set to 16 bit (I know you says it is, but just double check that this is really the case please)
4 - set screen res to 800x600 (some cards won't handle higher)
If you're still having a problem, try turning off the acceleration on your video card too.
Unfortunately the editor has not received extensive testing on a wide variety of systems so it's possible that there is a hardware compatibility problem too. If that's the case, please let me know and I'll report it.