I have Windows 7 32-bit service pack 1 also. (Yes, July 2020, still got it, and I finally got it to work yesterday and for the first time got a game running in RetroArch!) Changing the video driver to “gdi” in a new retroarch.cfg text file did work for me. None of the “d3d” options worked for me. I also changed the menu to rgui (menu_driver = “rgui”).
(Side note: To navigate the menu system, if “z” and “x” don’t work reliably, use enter to accept and backspace to go back.)
Later on I found out that the video driver “gl1” works for me also, and with “gl1”, all the four menu driver options work fine. (Since I’m on a low-end machine, the “xmb” menu driver is slow, but it doesn’t crash.) The “gl” video driver makes me crash, however.
So if anything, if you still happen to be on a Windows 7 machine, try either the “gdi” or “gl1” video drivers with the “rgui” menu driver. If you want to experiment with other video drivers after you got it to work the first time, then you’ll have to come back to your config file if it crashes. (That’s just what I learned along the process.
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