I experienced the same problem as tipsyt explained in the original post. I am running BF2 with patch 1.41 and 1.50 installed. I also updated the BF2 shortcut to run in administrator mode. I am not running BF2 in compatibility mode, but only with run this program as administrator ticked.
The following actions resolved my issue:
1. Delete the folder "C:\Users\<login name>\Documents\Battlefield 2\Profiles\Default\"
2. Delete the file "Video.con" in your BF2 profile folder, for me it is "C:\Users\<login name>\Documents\Battlefield 2\Profiles\0002\"
After you login to BattleField 2, update your display settings as required. I only changed my view distance to 100%.
See ya on the BattleField!