i FOUND THIS:
I had the same problem with my Radeon X850xt I found that by uninstalling and reinstalling the latest drivers fixed the problem, The same thing went for my dads computer, Try reinstalling the latest drivers for your video cards.
http://aeiouy.us/10-2005/failed-to-initialize-renderer-check-directx-version-and-graphics-settings/
Sorry, too busy to devote more time. Poke around and see if you can come up with something.
Without getting too far into it, I would do the following:
Download latest directx and install
reboot
download latest video card drivers from ati
download an uninstaller for your video drivers
uninstall video drivers
reboot
install latest video drivers