There were a few DLL updates between 4.07 and 4.09 (I forget when they arrived). Might be worth updating if you haven't already. Really there is little reason not to be on at least 4.09 if not 4.10.

I had trouble running under Open GL when I first installed my 5850. After a little tweaking I came up with some settings that worked. I don't know if they are optimal because I really haven't spent any time fine-tuning.

[Render_OpenGL]
TexQual=3
TexMipFilter=3
TexCompress=0
TexFlags.UseDither=1
TexFlags.UseAlpha=0
TexFlags.UseIndex=0
TexFlags.PolygonStipple=0
TexFlags.UseClampedSprites=0
TexFlags.DrawLandByTriangles=0
TexFlags.UseVertexArrays=0
TexFlags.DisableAPIExtensions=0
TexFlags.ARBMultitextureExt=1
TexFlags.TexEnvCombineExt=1
TexFlags.SecondaryColorExt=1
TexFlags.VertexArrayExt=0
TexFlags.ClipHintExt=0
TexFlags.UsePaletteExt=0
TexFlags.TexAnisotropicExt=1
TexFlags.TexCompressARBExt=1

TexFlags.TexEnvCombine4NV=0
TexFlags.TexEnvCombineDot3=1
TexFlags.DepthClampNV=0
TexFlags.SeparateSpecular=1
TexFlags.TextureShaderNV=0

HardwareShaders=1

Shadows=2
Specular=2
SpecularLight=2
DiffuseLight=2
DynamicalLights=1
MeshDetail=2
VisibilityDistance=3

Sky=2
Forest=3
LandShading=3
LandDetails=2

LandGeom=3
TexLarge=1
TexLandQual=3
TexLandLarge=1

VideoSetupId=17
Water=2
Effects=1
ForceShaders1x=0

PolygonOffsetFactor=-0.0625
PolygonOffsetUnits=-3.0