If you haven't already you might want to check out the info on this page.
http://www.ultimarc.com/avgainst.htmlI don't have a version 2, but on mine I have had alot of trouble with the driver install process. Things have to be done in a very specific way for it to work.
I cannot remember if it is the same error or if this even applies to the version 2, but I had a similar sounding error once and it was because the driver installer wanted the card to already be present in the device manager with a generic video driver loaded. Basically it just wanted to find an installed card and update it's driver, when it didn't find it already setup it gave an error similar to what you mention.
At times when I couldn't get it to install the driver, I would uninstall all the ATI software/driver programs from add/remove and run the cat-uninstaller.exe from the Ultimarc site. Then start fresh and everything would work.
Additionally I would think that installing directx version 9.0c should have worked for the directx requirement. As long as it is version 8 or higher, I could be wrong tho.