Extreme Direct X Difficulties

Hello! This is my first post here at TechSpot, appears to be a great forums.

Which brings me the point...I have QUITE the DirectX/Codec issue. It began with me noticing any .wmv video file played by all 3 off my media applications had either their colors inverted and wild looking, or simply didn't play at all (in the case of Winamp). Around this same time I noticed "dxva_sig" appearing on my desktop. I didn't think much of it assuming it was just a troublesome form of spyware or the like I had to root out or reformat to deal with.

Also, I recently bought Call of Duty 2, and when I select DirectX 9 for it in the Graphics options menu, it will freeze up on the level loading screen...however it curiously runs fine (albeit much worse looking) on DirectX 7.
After googling "dxva_sig", I began to tie it all together...obviously theres a problem with some media codec or my installation of DirectX 9. I attempted to run to the .exe provided to fix this problem by Microsoft via the Microsoft site, upon which I get this error:

"Setup cannot continue because one or more of the prerequisites required to install KB888656 failed. For more details check the Log File c:\windows\KB888656.log"

KB888656.log contained about 27 lines of text which I won't paste onto here unless its requested.

ANY help at all would be GREEAATLY appreciated. I do a lot of PC troubleshooting for my friends, and my own home network and 4+ PCs...but this problem has me stuck. Thanks!! :D

run windows update (you'll need to keep going until it finds no new updates), update your graphics card driver (may be in said updates).

what kind of card is this?

Thanks for the advice zephead...zeppelin rocks btw. =D

I have a Radeon x800 card...I ended up reformatting though since I didn't get any immeidate help on this site :/

Thanks anyway