I began having this same problem IMMEDIATELY after installing ATI's latest drivers for my video card. ATI has been no help so far, after submitting a trouble ticket on their website. Their Tech Support keeps sending me pregenerated responses which do not address my problem or mention any possibilities of a fix to the driver.
As it is, I will rolling back my drivers to the ones that came out of the box, the same ones I've been using for a year on various games including EQ2 with ZERO problems.
For those who may ask, I am both computer proficient and regularly do maintenaince on my computer including: virus sweeps, adware/spyware sweeps (2 seperate programs), registery scrub, and defraging the harddrive. This problem was clearly caused by ATI's newest drivers as the problem began occuring immediately after install and no other changes were made to my computer at the time.
The truly ironic part, is that the only reason I installed the new drivers in the first place, was because I got a message from EQ (original Everquest) saying that with my current drivers I may experience problems and that they recommended I download and install the latest drivers for my video card.
I'm using a Sapphire 128MB ATI Radeon PRO. Now I'm regretting not purchasing Windows XP Proffesional instead of the Home Edition, because then I could simply rollback my drivers with a single click.