I noticed a few people having trouble with this 'black out' issue. No one had the solution I have, so here it is.
This is the reason I wont by IWD2 from GOG since I will still have to use this walk around. If they do sort it then I would have no hesitation in buying it!

It happens mainly with Windows 7 and Nvidia cards (not all but most of the new ones)
Its to do with 'Hardware Acceleration' . With XP you could disable it and have the game run fine, but with Win7 the way to disable Hardware acceleration has been removed.
The bug itself is very annoying, the fog of war looks very blocky and when ever there is conversation it has a black back ground where it should be transparent.

So here it is. This Microsoft utility gives you the option to turn off hardware acceleration.


Download
http://www.microsoft.com/downloads/en/details.aspx?FamilyId=572BE8A6-263A-4424-A7FE-69CFF1A5B180&displaylang=en

Unzip and install

Run the following file


Select the 'DirectDraw' tab.
Untick 'Use Hardware Acceleration' under 'Performance'



Dont for get to enable it again when your done playing.

This fix solved my problem of not being able to deactivate my 3D Hardware accelerator on my NVidia 8600 gmt card. Now the game runs smooth and fine without the annoying black boxes.

A specification though, the download installs lots of stuff and the .exe you want to use to fix the problem is DirectX Control Panel, then just follow the great instructions posted by Bushmins

Also note that this fixed the graphic issues I had with Planescape Torment

Worked for me but just to clarify a little more the name of the file you want to run is dxcpl.exe I had a little trouble finding it