Things I have tried:
re-verify game cache (at least 4-5 times)
re-downloaded entire game
setup DEP to "opt-out" mode for both falloutNV.exe and falloutNVlauncher.exe
attempted to run from falloutNV.exe and falloutNVlauncher.exe (exact same issue as from steam)
experimented with d3d9.dll fix
deleted and re-dl all ini files (including the ini in my docs)
Ran both setup exec packs for directX and C++ from fallout new vegas redist folder
fully updated GPU drivers and .NET framework and all service packs
Things to note:
InstallScript.vdf never verifies but I'm led to believe this has no effect on the actual game. I have not been able to access ANY part of the game from the options or the launcher. I do not use active scan anti-virus. All other programs and windows behaves normally. Any help would be appreciated.
Specs:
WIndows XP
GTS 250
2 gb RAM
Edit: Whoops I forgot to mention that I also disabled steam overlay and steam cloud stuff for fallout NV. I also did the obligatory delete .blob file.