Try running the game as administrator, and in the compatibility options disable desktop composition (in Vista/7).
A couple people had missing or corrupt textures fixed by doing a clean reinstall of the game. Does Impulse have a tool to verify the install? If not, uninstall DKS, reboot, shut down all non-essential programs (especially anti-virus), make sure there is nothing left in the D2 folder (saves are stored elsewhere), then install DKS and the patch.
Did you try changing the texture quality setting? How about a lower game resolution?
Missing Water Textures ?
