This is normal, its due to running newer versions of Windows and DX.
You'll need to locate your Dangerous Waters main folder. Look inside it and you'll see a file named dangerouswaters.ini.
Highlight this file and make a copy of it. Stash the copy somewhere out side of your DW folder as a back-up in case things don't go right.
Go back to the original .ini file in the DW folder. Highlight it (single click) then right-click and select ""Open with" then select Notepad (and ONLY Notepad, the .ini file is raw text and it needs to stay that way).
Find the following section in the .ini :
[Graphics]
.MapStretch No
.ScreenStretchQuality 3
.ParticleMax 500
.ParticleRate 5
.LocalLights Yes
.TransparentWater No
.WantRain Yes
.Disable3D No
.Want3DClouds Yes
.WantVegetation Yes
.AdapterID 0
.DeviceID 0
.ModeID 3
.DetailTextures Yes
.BlendTextures Yes
.Caustics Yes
.WaterParticles Yes
.WaterReflectionQuality 3
.WaterQuality 4
.WaterDrawMethod 1
.CameraFOV 60
.WantShadows Yes
.ModelDetailTex Yes
.RunInWindow No
.Gamma ""
.SoftwareCursor No
The value in red text is probably set to 0 or 1, change it to 3. Then, save the file and re-start DW. You should see everything run in 1024x768 mode.