I have the same problem, followed all the suggestions and it still won't work.

By the way, here's the debug report.
Debug Message: Version v1.2 last updated on: Mon Jun 12 18:04:26 2006
Debug Message: *********DXDiag info follows.*********
System Info
Time: 8/26/2006, 13:02:27
DirectX Version: DirectX 9.0c (4.09.0000.0904)
Machine Name: DUCKSTAR
Operating System: Windows XP Home Edition (5.1, Build 2600) Service Pack 2 (2600.xpsp_sp2_gdr.050301-1519)
Languages: English (Regional Setting: English)
System Manufacturer: Dell Computer Corporation
System Model: Dimension 3000
BIOS: Phoenix ROM BIOS PLUS Version 1.10 A02
Processor: Intel(R) Pentium(R) 4 CPU 3.00GHz (2 CPUs)
Physical Memory: 510MB RAM
Page File: 329MB used, 917MB available
Windows Dir: C:\WINDOWS
Display Info
Display device 1:
Device Name: \\.\DISPLAY1
Card Name: NVIDIA GeForce FX 5500
Manufacturer: NVIDIA
Chip Type: GeForce FX 5500
DAC Type: Integrated RAMDAC
Key Device: Enum\PCI\VEN_10DE&DEV_0326&SUBSYS_196C270F&REV_A1
Display Memory: 256.0 MB
Current Display Mode: 1024 x 768 (32 bit) (60Hz)
Monitor Name: Plug and Play Monitor
Monitor Max Resolution: 1600,1200
Driver Name: nv4_disp.dll
Driver Version: 6.14.0010.9131
Driver Date: 6/1/2006 17:22:00
DirectX Acceleration Enabled: Yes
Sound info
Sound device 1:
Description: Sound Blaster Live! 24-bit
Default Sound Playback: Yes
Default Voice Playback: Yes
Hardware ID: PCI\VEN_1102&DEV_0007&SUBSYS_10071102&REV_00
Manufacturer ID: 1
Product ID: 100
Driver Name: P17.sys
Provider: Creative
Driver Version: 5.12.0001.0315
Driver Date: 6/9/2004 13:16:00
Type: WDM
Other Drivers:
Acceleration Level: 3
Cap Flags: 0
Min/Max Sample Rate: 0, 0
Debug Message: *********END dxdiag info.*********
Debug Message: Entering WinMain
Debug Message: ******* Starting Game Shell *******
Debug Message: Going Fullscreen
Debug Message: Preparing to change display settings.
Debug Message: Using multilsample setting: D3DMULTISAMPLE_4_SAMPLES
Debug Message: Game Resolution: 1024 x 768
Debug Message: Running fullscreen.
Debug Message: HAL (hw vp): NVIDIA GeForce FX 5500
Debug Message: D3DPRESENT_INTERVAL_DEFAULT
Debug Message: Refresh rate: 60
Debug Message: Bit Depth: 32 bit.
Debug Message: *********Checking D3DDevice Caps***********************
Debug Message: A full-color cursor is supported in hardware at high resolution modes.
Debug Message: RGB in format 6:6:6, Masks reported as ff0000:ff00:ff
Debug Message: Now Fullscreen
Debug Message: Shell initialization complete
Debug Message: ***** Initializing Game *****
Debug Message: Timer Frequency is 0 b25e6250
Debug Message: Initializing sound card.
Debug Message: initailizing bink
Debug Message: No string tables in C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default/Data/*.str
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Movies\*.bik
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Movies\techs\*.bik
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Gfx\*.png
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Gfx\Race\*.png
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\sfx\*.wav
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Music\*.mp3
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Event Music\*.mp3
Debug Message: Create setup screens.
Debug Message: Clear galaxy settings.
Debug Message: Clear influence.
Debug Message: Clear up laws.
Debug Message: Clear first time events.
Debug Message: Clear wonders and trade goods.
Debug Message: Clear sector mapper.
Debug Message: * Collectors Edition *
Debug Message: Set mouse.
Debug Message: Set update timer.
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Data\*.xml
Debug Message: Clear data definitions.
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Data\Techs\*.xml
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Data\ShipComponents\*.xml
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Data\ShipDefs\*.xml
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Gfx\Planets\C0*.png
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Data\PlanetImprovements\*.xml
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Data\TerrainColorSchemes\*.xml
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Data\PlanetDescriptions\*.xml
*DEBUG ERROR: ***Unable to find required tech ImpossibleTech for PirateShip. ***
*DEBUG ERROR: ***Unable to find required tech ImpossibleTech for Starbase. ***
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Data\Anomalies\*.xml
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Data\Events\*.xml
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Data\UPIssues\*.xml
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Data\Invasions\*.xml
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Data\PoliticalParties\*.xml
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Data\StarTypes\*.xml
Debug Message: No files found matching mask C:\Program Files\Stardock\TotalGaming\GalCiv2\Mods\Default\Data\StarbaseModules\*.xml
Debug Message: Reading Star Names
Debug Message: Reading Star Names... Done
Debug Message: TitleWnd: Quit Button.
Debug Message: Posting WM_CLOSE message.
Debug Message: WM_CLOSE message received.
Debug Message: GameUninitialize start
Debug Message: Killing Galaxy
Debug Message: Killing threads.
Debug Message: Kiling civs.
Debug Message: Killing ships.
Debug Message: Killing rallypoints.
Debug Message: Killing misc objects.
Debug Message: Killing stars.
Debug Message: Killing anomalies.
Debug Message: Killing space resources.
Debug Message: Killing colonies and planets.
Debug Message: killing scenario.
Debug Message: Clearing Turn Event Log
Debug Message: Clear galaxy settings.
Debug Message: Clear influence.
Debug Message: Clear up laws.
Debug Message: Clear first time events.
Debug Message: Clear wonders and trade goods.
Debug Message: Clear sector mapper.
Debug Message: Clear data definitions.
Debug Message: Killing Galaxy: Completed
Debug Message: GameUninitialize end
Debug Message: Device not cleared. 1 counts left.
Debug Message: D3D not cleared. 1 counts left.
Debug Message: Destroying Window.
Debug Message: Main Shell terminating normally