Microstudio 2.506 doesn't display graphics properly in 8 bit mode

[Jimz201]

I downloaded the upgrade 2.506 for microstudio obtained the password etc. and installed it.
It tells me installation is successful but when I am on the play tab and try to play a cdg song the graphics are distorted (they are broken up and have black lines running through them.
I'm running XP with a 1.8 gig processor and 1 gig of ram. the graphics are clear if I use the true color setting but break up when I try to go full screen it breaks up.
I'm ruuning DirectX 9 and have the newest drivers from adaptec.
I have reinstalled 2.400 and every thing works perfectly.
Has anybody else had any trouble or does anyone have a suggestion on how to fix this?