Thanks for trying. At least that eliminates that. (and you'll be better off in the long run anyway)
What the hell is doing this...? Remember wayyy back when... Taldren used to advise us to update our video drivers when we ran into Dyna login troubles... I know, it makes no sense, and I still have no idea why, even with the EAW source in hand...
But updating the video drivers (or changing to a WHQL set) might be something else to try. If that doesn't do it...
I'm going to add you to the beta group, right now, check the first post in the stickied thread and grab the files. Then let me know if you get the same issue with SFC:CE, I at least have the source code for that product and may be able to address this. My concern, since your XP install is a fresh one with all fresh updates, is that Microsoft has done something to break SFC on XP recently...
edit: Oh crap, I have to add Starfleet2.exe to the validatedclientfiles folder on The Forge CE beta server (we have been using different builds sometimes), the beta server needs a reset anyway. I will advise when complete.
As a beta group member you'll see a new forum visible in the Dynaverse.net section on the board index, the sticky thread I speak of is there.