Thanks haynor666 and Minwah you are both helping me get closer! This seems to be either a DirectX Problem or a SoundCard for sure. My dxdiag crashes at directinput and asks me if I want to bypass. If I select "no" then dxdaig will crash.
Here is what I have tried so far
1. Uninstall and re install of drivers for Creative PCI Audigy 2zs, with same outcome, directinput will cause dxdiag to crash.
2. Complete re-install of Windows XP 64 using Creative PCI Audigy 2zs drivers. Newest from Creative for 64bit.
3. Complete re-install of Windows XP 64 and removing the Creative PCI Audigy card from PC. Then using onboard sound instead.
All results in directinput crashing during dxdiag..
Same deal no matter what

Can't figure out how to install Directx 9.0c without having errors with directinput..