"Direct3D Device creation failed" error

Heya, i'm new here, so gimme some slack ..

and b4 ANYONE yells at me for not reading the FAQ, I DID.

So here it goes:
My prob is, whenever I start dolphin, it gives an error saying:
"Direct3D Device creation failed!"

I've read all about this and that it is related to having a bad/old GPU.
Only problem is, I think i have a GPU that is too new.

Here are my sys specs:
Motherboard: Gigabyte GA-965P-DS3
CPU: Intel C2D E6600 @ 3.6GHz (watercooled; can do 4GHz)
RAM: 2GB (1GBX2) OCZ Gold Gamer XTC PC2-6400 (5-5-5-12, 1:1 Ratio)
GPU: ATI Radeon HD2900XT 512MB GDDR3 (DirectX 10 card, so can do SM4)
Drivers for GPU: ATI Cat 7.6 (latest)
OS: Windows XP Pro SP2

I don't think it is my GPU being old

I only have 2 games:
SSB:M
and
Soul Calibur 2

which both do not work.
I know i won't be able to run at full speed, but I want to at least run the thing..


EDIT:
I just tried different settings for the GFX plugin, and it doesn't show the error anymore. Now the program doesn't word and windows shuts it down.
In the event viewer, it says:
"Faulting application dolphin.exe, version 1.0.0.3, faulting module sdl.dll, version 1.2.8.0, fault address 0x0001a713."