Hey everyone, I did everything that you suggested above as well (just like attainteddragon) and I am still having the same issue. Diablo4Lyfe, does that work even if I don't have the Hellfire expansion, or is there something else that I need to do to fix it if I only have the original?
To solve direct draw compatibility issues with any game (and especially Diablo/Hellfire), you can follow the method I described step by step here:
This is the only reliable method to do it, as all other involves some kind of hack/OS tweaking. No need to kill explorer.exe or anything like this, ddraw compatibility was made just for this, but it's kinda tedious to do it right. Don't forget to use WinXP3 compatility on the step that is used to get the game's ID (double check that the last-run executable is the correct one before converting the ID).