If it's not crashing, check your resolution in your prefs.ini in the appropriate folder in My Documents\My Games (GalCiv2/GC2DarkAvatar/GC2TwilightArnor).
If that doesn't work, or you get a new error, post up your debug.err found in the same directory. In older versions of DL it was located alongside the executable and launcher, but in more recent versions it can be found in My Games as well.
I assume you're referring to Microsoft's "fix" for AMD dual cores-it's probably a good idea to install that in addition to AMD's optimizer. I'm not sure why it would say SP2 only, but it's probably just a minimum requirement and hasn't been updated to reflect SP3's existence. (After all, it would make no sense to download it to install in SP3 on a system without an AMD CPU, or a multicore one at that, and it would make even less sense to lock out those who install SP3 from installing it in the first place.)