I too am having this problem. I'm running Build 1500 of ArcGIS Desktop Explorer.
I ran your requirements program (Can you run it?) and my system meets your recommended requirements. Any help you could provide in solving this issue would be appreciated.
CPU
Recommended: Intel Core Duo, SSE2 (or greater) Pentium 4 or Xeon Processors
You Have: AMD Athlon(tm) 64 X2 Dual Core Processor 5600+
PASS
CPU Speed
Recommended: 2.4 GHz
You Have: 2.9 GHz Performance Rated at: 5.8 GHz
PASS
RAM
Recommended: 2 GB
You Have: 3.0 GB
PASS
OS
Recommended: Windows XP minimum SP2, Windows Server 2003 minimum SP1, Windows Vista minimum SP1, Windows Server 2008 or Windows 7
You Have: Microsoft Windows XP Professional Service Pack 3 (build 2600)
PASS
Video Card
Recommended: 256 MB video card with Pixel & Vertex Shader 3.0
You Have: GeForce 8800 GT
PASS
Features: Recommended attributes of your Video Card
Required You Have
Video RAM 256 MB 913.0 MB
3D Yes Yes
Hardware T&L Yes Yes
Pixel Shader version 3.0 3.0
Vertex Shader version 3.0 3.0
Free Disk Space
Recommended: 198 MB
You Have: 15.1 GB
PASS