Try turning off hi-def cutscene support (in the mod-related category in 2.0), and state your system specs.
That fixed it.
Sys info:
OS Name Microsoft Windows XP Professional
Version 5.1.2600 Service Pack 3 Build 2600
System Manufacturer D850MV
System Model MV85010A
System Type X86-based PC
Processor x86 Family 15 Model 2 Stepping 9 GenuineIntel ~2674 Mhz
BIOS Version/Date Intel Corp. MV85010A.86A.0067.P24.0304081124, 4/8/2003
SMBIOS Version 2.3
Total Physical Memory 768.00 MB
Available Physical Memory 243.53 MB
Total Virtual Memory 2.00 GB
Available Virtual Memory 1.96 GB
Page File Space 1.83 GB
Page File C:\pagefile.sys
Display
Name NVIDIA GeForce 9400 GT
PNP Device ID PCI\VEN_10DE&DEV_0641&SUBSYS_00000000&REV_A1\5&1092266&0&0060F0
Adapter Type GeForce 9400 GT, NVIDIA compatible
Adapter Description NVIDIA GeForce 9400 GT
Adapter RAM 1.00 GB (1,073,741,824 bytes)
Installed Drivers nv4_disp.dll
Driver Version 6.14.11.9745
INF File oem4.inf (Section005 section)
Color Planes 1
Color Table Entries 4294967296
Resolution 1024 x 768 x 85 hertz
Bits/Pixel 32