I just managed to fix this issue, and thought I'd share the solution. I attached a debugger to the process and found that the problem appears to be caused by
atigktxx.dll. The solution is to swap the file installed by more recent Catalyst drivers for the one in 11.9. Fortunately, swapping in this old file doesn't appear to cause any other issues. You can download the correct file here:
http://www.kn00tcn.net/site/cities-in-motion-startup-crash-fix/There are known problems with more recent versions, leading to incompatibilities with other apps and games (e.g. see link). More seriously, the issue can also lead to freezes when using standard Windows open/save file dialogs (freeze occurs whenever the dialog tries to show an image thumbnail*), which can cause users to lose work, because the program hangs before (or, rather, as) they save it. Despite my sending detailed bug reports, AMD appears unable or unwilling to do anything about it - there have been several new driver iterations since I reported the issue.
Here's hoping 12.9 finally addresses the problem, but in the meantime, I hope this gets you going.
Best,
Chris
(* Note to Corel Devs: I don't know if you guys install some Windows Explorer-integration that affects thumbnail display. If so, you might want to check that it isn't an incompatibility between it and newer atigktxx.dll versions that causes these issues. This is of greater import than PSP simply not running, since these freezes can occur in
any application that uses a save dialog - including, for example, MS Office.)