Video troubleshooting in Word XP

Please help me understand this...

When I open a document with embedded graphics in Word XP, the graphics
do not show. If I click on a location where I know there is a graphic,
it outlines the graphics box but the contents do not display (picture
placeholders is unchecked in tools|options.) If I change hardware
acceleration (Display Properties|Settings|Advanced|Troubleshooting) by
moving the slider to position 3 of 6, my graphics appear normally. My
question is, what does this tell me? Does this behavior point to a
graphics card driver problem, a DirectX problem, a Windows configuration
problem, or what? I assumed I had a bogus video driver, but the card
maker (XFX) says they can't reproduce my problem and that my "system
configuration" is hosed. What do you guys think?

Dave