When I start the campaign and try to leave the diary screen the following error pops up immediately:
SlimDX.Direct3D9.Direct3D9Exception: D3DERR_OUTOFVIDEOMEMORY: Out of video memory (-2005532292)
at SlimDX.Result.Throw[T](Object dataKey, Object dataValue)
at SlimDX.Result.Record[T](Int32 hr, Boolean failed, Object dataKey, Object dataValue)
at SlimDX.Direct3D9.Texture..ctor(Device device, Int32 width, Int32 height, Int32 levelCount, Usage usage, Format format, Pool pool)
at Zafehouse2.DX9Renderer.EndDrawing(Rectangle srcRect, ShaderEffect shader, Int32 pass)
at Zafehouse2.InterfaceManager.CreateGlowTexture(TexturePlus BaseTexture)
at Zafehouse2.Widget.TriggerGlowFadeIn()
at Zafehouse2.GameWindow.DoMouseMoveEvents(MouseEventArgs e)
at Zafehouse2.GameWindow.GameViewMouseMove(Object sender, MouseEventArgs e)
at System.Windows.Forms.MouseEventHandler.Invoke(Object sender, MouseEventArgs e)
at System.Windows.Forms.Control.OnMouseMove(MouseEventArgs e)
at System.Windows.Forms.Control.WmMouseMove(Message& m)
at System.Windows.Forms.Control.WndProc(Message& m)
at System.Windows.Forms.ScrollableControl.WndProc(Message& m)
at System.Windows.Forms.Control.ControlNativeWindow.OnMessage(Message& m)
at System.Windows.Forms.Control.ControlNativeWindow.WndProc(Message& m)
at System.Windows.Forms.NativeWindow.Callback(IntPtr hWnd, Int32 msg, IntPtr wparam, IntPtr lparam)

My specs are as follows:
Windows XP Service Pack 3
Intel Pentium 4 CPU 3.00 GHz x2
1 GB Ram
NVIDIA GeForce FX 5200

Any input would be greatly appreciated.

And yes I did use the new update.