I am also getting this error, im pretty sure i have direct draw compatibility. read through all the posts and replies and tried them and nothing. I have a an i5 cpu and a 1060 3gb gpu.

EDIT: I changed my compatibility setting to Windows 98, I had to allow the fire wall to let it through, ran as admin. Boom its sorted now

I wanted to play this game today and I left myself a readme txt file on how to resolve this issue, this is what it says

"Direct Draw error
The game has some issues with HDMI displays. If your are connected to an HDMI display,
your game will get that error. Use VGA. That's it."

sure enough I changed to VGA connection type and game is working flawlessly.