I suspect the problem is with the video card or driver. Not sure if this will help.
http://support.microsoft.com/kb/894733/en-us?spid=1823&sid=globalThe Safe Mode option
The Safe Mode option puts Flight Simulator 2004 - A Century of Flight in a Software Video Rendering mode that is independent of the video hardware and its drivers. You can use the Safe Mode option to diagnose the reason why the game stops responding or unexpectedly quits. The Safe Mode option can help you determine whether the issue that you are experiencing is specific to your hardware or to your drivers. Additionally, sometimes the Safe Mode option may be the only way that you can start and use Flight Simulator 2004 - A Century of Flight. If your issue disappears when you start the computer by using the Safe Mode option, you may have to update your video driver.
To start Flight Simulator 2004 - A Century of Flight by using the Safe Mode option, follow these steps:
1. Click Start, point to All Programs, and then point to Microsoft Games.
2. Point to Microsoft Flight Simulator 2004, point to Troubleshooting, and then click Safe Mode.
PS. Don't confuse this with Windows Safe Mode.