Mafia II Demo crashing to desktop when "Launch Demo" is pressed

[Mr.Towelie]

Hello,

I have the following problem:
Whenever i launch the mafia 2 demo and click on the "Play demo" button within the game, the game crashes to desktop without any error.
I've downloaded the demo from steam, installed the included directx update and physx update.

Specs:
Windows 7 64bit
Intel Core2Duo e6750 @ 3.2 Ghz
ATi HD 4870 1GB (latest drivers - 10.7)
4 Gb of RAM

Any ideas ?
DxDiag: http://pastebin.ca/1915259

Edit: Tried re-installing the demo through steam several times.
Also, I am launching the demo from steam, not from the mafia2 exe.