Ren, if you are having problems when you start the DX diagnostic program, you've already found what you need to fix. Its going to be 1 of 3 problems: corrupt DX files, bad video driver, or bad sound drivers (or possibly just a very confused Direct X if you havent been properly uninstalling drivers in between taking things out and putting them back in).
What I would do is uninstall your drivers for video and sound. If you dont plan on using the onboard sound, then disable it and put your soundcard in that you plan to use. Uninstall the drivers. Download and run this program:
http://www.drivercleaner.net/It will clear out all the references to the drivers in your registry and in Direct X and clean it all up for you, nice and neat.
Reboot.
Install drivers (4.12 catalyst drivers for the ATI card) for video and sound.
Go to Microsoft's website and download and install a new copy of Direct X 9.0c here:
http://www.microsoft.com/downloads/details.aspx?FamilyId=0A9B6820-BFBB-4799-9908-D418CDEAC197&displaylang=enReboot.
Run Direct X diagnostic program, and run the video and sound tests. If it passes with no problems detected, move on. Set sound hardware acceleration to 3/4 just to be safe. You can always turn it back up later.
Go to your video card's control panel and make sure your AA and AF are set to application preference.
Go to the AH folder and delete your video configuration file. Probably unnecessary, but why have to go backwards? AH will automatically pick up the card again and rebuild the file.
Try AH again. If you still have a problem at this point the only thing I can suggest is to delete AH and reinstall it from scratch.
Good luck.