This exact setting has changed since 0.98, but it's still in the mame.ini file or command line (or mameUI UI): -video. If you look at docs/windows.txt that should have come with 0.129 you'll see more details, but basically change the line in the mame.ini file from "video d3d" (the default) to "video ddraw". It used to be done a little differently, but the equivalent used to default to ddraw.
I'll bet your video card isn't direct3d 9.0 compatible (assuming you're using the same hardware as 0.98).