That's really odd! I mean, that ATI card is really recent one, does not it?
I think you may need to first update the drivers...
(Choose your card and your operating system. Download and install the driver there)
Then, you may need to do DirectX Diagnosis by press Windows Sign + R
and type dxdiag
and press Enter. There should be no problem if your card works fine...
I find it rather odd to get that error with that video card it's not like really old video cards (e.g. ATI Radeon 9000 per say...)
Sincerely, Pan2011 ~ Pan2012 (May 5th, 2012)