I would suggest that you do a clean driver install, lets try and do this as a step by step process.

First grab the newest drivers from the AMD website.

Now get Driver Fusion (Used to be called Driver Sweeper) from :

http://treexy.com/products/driver-fusion

Now install that (Just get the free version)

So uninstall the drivers and all the other ATI stuff from add / remove programs in your control panel. Now dont restart just yet even though it prompts you to.

Now run Driver Fusion and remove all the ATI stuff using that program. It gets rid of old entries etc.

Now do a restart and you will have a basic vanilla driver that comes with Vista. Now install the new AMD driver and then do a restart and try again

I can't see the specific file you want me to delete, and this program you had me download is giving me the option to delete a bunch of crucial programs. Nothing has the letters 'ATI' and I'm afraid of clicking on anything else.

Is there a more safe way of doing what you're asking of me?

You want to be deleting the AMD Graphics drivers only. It will be listed as AMD Display

That is not good bacause - most likely - it is OEM & DELL taylored version.. Guess it will not install on non-Dell PC (like VirtualPC) and changing your hardware (buying cheap second GFX and setting up an alternative config) is also not an option because it would invalidate your OS copy.

I see 2 options here: you may enter shaddy grounds finding yourself a copy of OS... or buy XP 32 OEM (in Poland $50) and use it on VirtualPC. I know it seems expensive but in case your real hardware will cause problems - you would have an alternative config that would be perfectly tailored for any game that does not use 3d hardware acceleration.

EDIT:
I also see
http://appdb.winehq.org/objectManager.php?sClass=version&iId=208
that IWD should be playable unter WINE - but never played with this application. Possible help from others?

@ianinmet

I have completed all of the steps and the same issue is occuring. Thank you for trying that, that was a new fix attempt at least.

@tburger

Or #3, I can get refunded, or at the very least an apology.

This is quite possibly the most frustrating purchase I've ever had to deal with. I am having a hard time typing right now because I know if I don't restrain myself I'm going to say something I will regret.

Lillycake, Having read this painfully long thread I have a suggestion. (-;

I would like to know exactly what graphics card you have. To do this I would recommend downloading a program called CPUZ, running it and taking screen shots of the CPU, Mainboard and Graphics tab.

http://www.cpuid.com/softwares/cpu-z.html

Once you have done that we can then ensure that that latest supported version of drivers are installed and then we can rule out the graphics card and move on in a hopefully logical step by step way until we find this issue.

I've explained my computer specifications already, why would I need to download something else? Sorry if that came out rude, I don't intend it to be, I am just confused.

That is correct, you have stated the make of card but not the model.

No need to apologise, I work in IT and can really understand how irritating this type of issue can be!

Here is the link:

http://www.cpuid.com/downloads/cpu-z/1.61-setup-en.exe

hahaha let's hold with this for a moment, ok?

It's quite late here in Poland. If you give me 24 hours I'll try to set up VirtualPC with some kind of Linux distribution + wine and try to make IWD run on it (we are talking about IWD1 here? because I have only IWD1 from GOG). If I succeed - we will think what to do next, ok?
Cheer up man - it's GOG forum - we won't leave you behind :-)

I missed part of your question.

The reason why CPUZ should be downloaded is because it clearly states the make and model of you CPU, motherboard and graphics card.

This information is important so we can ensure that the right drivers are installed for that card.

So far we just know that you may have an ATI card, but we have no clue on the model.

For example I have an ATI Radeon HD 6870 installed and the latest supported drivers is currently version 12.8

Sorry my reply took so long, I had to download the program, then I had to learn how to take screenshots of my desktop, then I had to learn how to create a decent image, then I had to learn how to upload (went through three sites, they kept requiring me to enter personal information.)

Hopefully this works :

http://postimage.org/image/th6wlwdnx/

Thank you!

The next step is to ensure that the latest driver is installed, then we can start to rule this area out.

Please could you download and install the latest graphics card drivers for this card. It is version 12.6 and is the first download link on this page. You will need to restart your PC after it is installed.

http://support.amd.com/us/gpudownload/windows/legacy/Pages/legacy-radeonaiw-vista64.aspx

Then try to run the game in Full screen and Windowed mode, if that does not work then we will take a look a various graphics related settings.

Yes that's the current driver I'm using. Just recently someone in this thread had me download Driver Fusion and I erased all of my divers and reinstalled that one.

I wish I can tell you the differant options I've tried, I really went through everything I know of.

-I've tried each differant compatibility mode after right clicking on the game. I tried checking and unchecking all of the boxes inside of that window as well.
-I've tried running in admin mode for each diffearnt version.
-I've tried the regular and expansion version seperately.
-I've tried the patched regular and patched expansion versions seperately as well.
-I've tried installing the game into the default directory (Program Filesx86) and out of it (C:\).

Something special of note:
-I can run Planescape Tormet, Baldur's Gate 1 & 2 + expansions perfectly fine on this same computer. (In case you don't know they are extremely similiar games and typically share the same troubleshooting issues.)

Okay, I will not mention the driver version from this point forwards! (-;

Next on the hit list is the Direct X version. Could you install the latest Direct X run-time then restart and try the game in both full screen and windowed.

Here is the link:

http://www.microsoft.com/en-us/download/details.aspx?id=35

I downloaded the program and it told me it was up to date and no installation took place.