I tried installing service pack one and two but no change. I recently did a re-boot of my computer and before i did it, when ever I would start the game, there would be a little message in the bottom right that would say something like, "windows has changed graphics to classic view". I can't remember what it actually said. Does your's say that and what does it exactly say? Mine doesn't say that anymore. I wonder if that is the problem.
The graphics flash as soon as I try to start a flight. I get it all setup but then once it is loaded and I see the aircraft, it starts to flash.