Ok it seems to be a Windoze related issue (surprise, surprise)
drivers... personally, my advise would be:
1) Install the Aug 2009 DX9.0c redist from microsoft.com.
2) Go on Microsoft update, install any update it detects for ATI video.
3) Download and install the latest ATI driver package. (Don't reboot after this step, even if the system asks you to.)
4) Go into device manager, delete everything under Display Adaptors.
5) Now reboot. Let Windows sort out the drivers, detect the 'new' hardware and pick whatever the heck drivers it feels like.
Sometimes letting Windows have its way is the only way to have a functional install.
