Problems with starting the game

[Warhound]

Your 9800GTX is almost certainly the problem (together with windows XP).
Even though it's a 32bit app this game has a strong preference for 64bit windows 7 and needs all the VRAM you can throw at it.
In all honesty your pc is borderline minimumspec on all fronts and will struggle to run the game decently.

But try going into the video options and turn everything down to the minimum, including your resolution. Then if that works slowly work your way up to where the game runs at a reasonable framerate.
Settings that are known to overload weaker graphics cards are SSAO; grass; shadows; texture quality and forest. Also untick the anti-epilepsy filter, providing you aren't epileptic!, or you will see some very psychedelic cockpits.

edit: There is also a patch in the works that is supposed to give better performance across the board, but will obviously benefit lower end machines the most. Noone knows when it will see the daylight right now... could be anything between 2 days or 2+months, but if nothing else works don't abandon hope yet and wait for the betaversion of said patch.