Coelocanth: Check
This Thread. Similar issues, so maybe one of the solution in there will work for you.
the above fix is retarded...this one is easy..
I'm playing under Vista, and have the same problem with an ATi 4850, and I used this trick under XP for other games too. But another solution is possible (very useful under Vista / 7, though it may help with XP too, maybe with better performances) :
Download the Microsoft Application compatibility toolkit, and then launch the Compatibility Administrator (in Admin mode). Right-click on New Database in the list, Create New Application Fix, fill the first part, uncheck Windows compatibilities ("None") in the second. Then search for "ForceDirectDrawEmulation" and tick it. Skip the last part, close the window. Then save the database somewhere (preferably at the root of the game's directory), then right-click on the barrel (or go to File [...]) and Install it. You can eventually close everything.
From now on, the game should run with forced DDraw, without changing the general 3D parameters. And from what I saw on Planescape, and now IWD2, everything runs smoothly (a steady 30 fps). I hope it will help ! (it may also help with on-screen artifacts, or others bugs, even more if coupled with D3D Windower).