I've got nearly the same issue. I get the same error immediately when launching the game. No video/menus, I just get a blank screen and the error. It will create a minidump file in your install directory, however that file appears to be encrypted. Things I've tried to no avail:
1) Used launch options: -windowed -640x480 -lowdetail.
2) Verified game cache (claims to download a file but shows 0 MB downloaded).
3) Deleted local game content and re-downloaded the game.
4) Update to latest graphics drivers (ATI).
5) Ran C++ Redist. and DirectX installers directly from the install directory.
6) Launched game directly from the install folder (rather than Steam).
Nothing has worked and it's pretty frustrating. I'm running WinXP SP3, by the way. I found one more solution that I will try tonight which is to update DirectX manually from this link:http://www.microsoft.com/downloads/en/details.aspx?familyid=2DA43D38-DB71-4C1B-BC6A-9B6652CD92A3&displaylang=en&pf=true