"I'm running DirectX8.1 (4.08.01.0881), is that kosher?"
That is the version I have, and the game runs fine here.
"I have been selecting Direct 3D on the configuration screen (where you select resolution etc...), is it possible I should be selecting something else?"
If you try software or Direct Draw mode and your game stops crashing, then yes, you should be selecting something else. <img src="/ubbthreads/images/graemlins/winkwink.gif" alt="" /> Direct 3D can cause problems for some people in the council hall or with cut scenes, but I have not heard of it contributing to random crashes. Can't hurt to try, though.