Sounds like your puter doesn't like Direct3D. Set it to Direct Draw (2D).
Run the Vidtest (probably at "C:\Diablo II\D2VidTst.exe" or "C:\Program Files\Diablo II\D2VidTst.exe"), and no matter what the test comes back with, pick the 2D mode.
Afterwards, you may want to check your drivers for your video card. THey may be out of date. You should also check that you are using the current version of DirectX.
-rcv-
Run the Vidtest (probably at "C:\Diablo II\D2VidTst.exe" or "C:\Program Files\Diablo II\D2VidTst.exe"), and no matter what the test comes back with, pick the 2D mode.
Afterwards, you may want to check your drivers for your video card. THey may be out of date. You should also check that you are using the current version of DirectX.
-rcv-