To start off with... don't use mame32 in a cabinet. It really wasn't designed for it.
Get everything working in mame.exe first... then worry about mame32.. It might be something in mame32 specific.
but it sounds like the ati's don't like one of your settings. Try disabling ddraw, hwstretching, vsync, triplebuffers ect. one at a time until things start to work.