There is no AMD dual core fix for vista... that's why it must be run in win98 compatibility mode.
In XP, you can install the fix and then not have to use compatibility mode.
Also, the video file is in PROGRAM FILES\HTC\ACES HIGH II\SETTINGS\video8.cfg
Try deleting that and it will regenerate when you load the game. You'll probably have to reset your video setting for AH though.