getting the same problem
my drivers are all up to date and steam is banned from my pc so that's not the issue
My Issue:
Arma2 CO + Reinforcements runs fine by itself but when I try using spirited machine mod launcher I get failed to initialize 3d engine or Error message: compiling pixel shader PSSpecularAlpha:0
everything worked fine before installing the new 162 patch
<edit> Found the issue it's not the launcher or the patch but the mod patch fix I was using
okt_noBlur_OA_retail_1.60 -disabled it & works fine
guess we will have to wait for a okt_noBlur_OA_retail_1.62 patch now </edit>
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