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Check the Daikatana's Steam Cache for starters. If no errors are found install the community produced patch 1.3 into Daikatana's folder.
If that doesn't help then update your display drivers and install latest Windows updates from Windows Update. On my machines Daikatana doesn't need administrator priviledges but you might want to try it out too.
Try disabling your anti-virus also. And close/terminate all the background programs you might have. Also terminate the background services you don't need. Also try starting Daikatana from the Windows command-line in a single-core mode...
Navigate to Daikatana's folder using Windows Explorer:
"C:\Program Files (x86)\Steam\SteamApps\common\Daikatana"
When you're in that folder then do:
Press shift + rightmouse button -> "open command prompt here" from the context menu.
Type into the command-line:
"start /affinity 0 daikatana.exe"
Try these things first and report back.