Windows 7 - Neverwinter Nights Diamond Issues

hey i just got neverwinter nights diamond and installed it. when i click play a pop up comes up that says there are known compatibility issues for the game. i tried troubleshooting it by running in compatibility mode for xp service pack 3 and it still wont work. im using 64bit windows 7. any help would be appreciated

In Action Centre, is there a solution for the problem? If not, right click, select Troubleshoot Compatility and follow the instructions. Update all your drivers and make sure the game is fully patched. Install the latest Direct X too.

I'm using Windows 7 64-bit and Neverwinter Nights runs just fine.

However I believe I had to run it as Administrator or in XP/SP3 compatibility mode (or both).

Edit: I have nwn.exe set to run in compatibility mode (Windows XP / Service Pack 3).

I loaded NWN1 with the 1.69 patch. At first it ran perfectly. After windows updated, I tried to log into the Dex server, and found that my cursor was invisible. It is still there, but just not showing. Without the 1.69 patch, the game wont load at all. When I start NWN, I get a notification saying that the color scheme has been changed to Windows7 Basic, and that a visual program is running that is incompatible. I have reinstalled several times now, and continually get the same notifications. If I install without 1.69, the game will not start at all. I have currently uninstalled NWN, so I can't bring up the error messages for exact quotes. I have tried the compatibilty options for XP, both sp2 & 3, as well as administrator. All with the same results.
My machine specs are;
Dell Dimension 5150, Intel Pentium dual core 2.66ghz/core, 4gb ram, 280gb HDD, 512mb Diamond HDMI vid card running ATI Radeon drivers with AMD Catalyst control center.

Any suggestions how to fix this will be greatly appreciated.