Triple post, I'm sorry, but believe it or not, according to some sites I'm reading, it has less to do with Diablo's use of DirectDraw and more to do with Direct3D. Still no solution, but I'm continuing to look...
EDIT: Either run in Glide, or software (you will LOSE special effects if you run in software), and see if you get the same errors.
Run MAME32 in GDI mode, and see if that fixes it.
If this doesn't work, try the processor affinity settings.
If that doesn't work, make like us sensible people, uninstall Vista and run XP.