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Switching compatability to XP or run under Admin does not resolve the issue. All files have been verified.
.... Apparently this isn't a new issue either and has occurred during Windows Vista's days:
http://forums.steampowered.com/forums/showthread.php?t=829459
I'm just about to test one of the possible solutions from the above link.... one moment.
After the DirectX install is complete, even though it doesn't state that you have to..... restart your system.
When you reboot it will take a bit longer to get to your desktop and you will hear your HD doing a bit of work updating this and rewriting that due to the DirectX setup earlier....
Once you have restarted, launch the game.
Enjoy.
maximus007 -
further detail:
lp3hora -
I just had to restart and it worked for me without having to do any of the above, but who knows?