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I have a Radeon 9500 and I can't run Xeon w/hardware acceleration using retail Direct3D runtime. (Even if you installed the debug version of DirectX, the retail runtime is probably still active.)
I've found out that going in the new ActiveX control panel icon, under the Direct3D tab, and selecting "Use debug version of Direct3D" allows me to run in hw mode. (Just remember to turn it back to Retail when you play some other games as the debug version is slower.)
Hope this helps.
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