OK...here is the update.
As you know I have installed win xp pro again and it didn't do much good. The direct input error, merory reference and crc are piling up. So I decided to investigate the hardware a little more. I have tested the memory idividually and out of the three bars (far right socket) one showed a lot of errors. So I took it out and reformated the whole thing. Well ...as you can expect the errors were the same even without that 512. So...I took the memory to my friend that has a similar system and we tested the memory but it came out fine without any errors. I have been doubting the new direct x as a casue of my problem but now i\m starting to thing that it is my motherboard. I don't really have the tools to test my motherboard but since that memory had errors on mine (and all three were from crucial bought at the same time) and it did not have errors on my firends PC I think it's the motherboard. This could explain the CRC errors coming from the cd (connected to the motherboard) and the CRC errors when accessing files on my system hard drive (connected to the motherboard). I guess it coulde also mean that my direct input file is not working properly since the key./mouse are connected to the motherboard, and just maybe my ATI radeon 9700 pro is not working with the new directx beacuse of my motherboard. I don't really really know. These are just guesses.
I still have warrenty on my MB ( gigabyte ga7vaxp) so I'm goning to replace it and hope that the problem will be solved. I will also test my pc with my friends 9700 pro card just to make sure that it is fine.
Now...well I have directx 9.0 installed that came with TRON 2.0 game. And whille I am waiting for a replacment I've only installed tron (don't ask how...it was a tought with all the CRC errors) and that's it. Nothing else on installed. I've crancked up the video card to optimal quality and my eyes are orgasming with the beauty of the TRON game.
The funny thing is

that because of the dinput8.dll (another guess) my keyboard and mouse are not working like they should. So while I am playing I hit the left mouse button once and it won't stop or the meyboard just goes nuts and well...I just sit and smile

at Jet (TRON) running into walls, jumping of high cliffs, or waisting the disc energy because I can't really stop the mouse.
Well Im still very open to suggestions and thanks for that memory testing utility.
So is it the motherboard? or is it not? what else could it be?
dinput8.dll - crashing applications the link my other post.