If you have the DX9 demo, the latest DX9 drivers for your x1950, and the April 2007 update for DX9 from Microsoft, then the only thing I can think of is that your display resolution isn't supported. Try hitting alt-enter when the game loads to switch to windowed mode. From there, you should be able to select a resolution supported by your display. Keep in mind, however, that the game primarily uses widescreen resolutions, so you might be stuck at 640x480 until the final game releases with (hopefully) more resolutions.

Been a PC gamer for a while. Patience is a virtue here, more so than with consoles. Enjoy the demo!