I am not shure if this will help you. I read other people having this problem so I am not installing direct x 8. so i only can say is uninstall it. i am not shure how you do it cause i installed it but had to use my windows me to go back to anthor days setting.
IF you dont have windows me i am not shure what you can do except to cry or reformat your hard drive and install everything from scratch and not install direct x 8. (wich i did alot before i got windows me)
I have the same problem. Pretty lame it doesn't recognize a newer version.
It works anyway, though. Just don't start the game from the CD. Have the CD in the drive, but start the game from the Start menu. Then I have had no problems (at least with this part).