Windows Vista and 7 have known compatibility issues with Diablo II/LoD ... to fix them, take the following steps:
Right-click your Game.exe file and in the compatibility view, make certain you are running the game under Windows XP SP2/3 mode, and DISABLE DESKTOP COMPOSITION. This should allow your game to start normally, but you will probably have serious lag spike issues that need to be resolved.
On your Desktop, hit Control+Alt+Delete and open your Task Manager program. Select the "Services" tab, and click the "services" button at the bottom of that screen to access your services manager. (you can close your Task Manager now) Scroll down the list until you find "Windows Media Player Network Sharing Service". Stop this service, then right-click it and select "properties" and then DISABLE this service.
This will fix your lag issues and compatibility issues with D2 in Windows Vista (6.0+) and Windows 7 (currently release candidate version 7.1.00)