Settings revert to default

Hi folks, I'm having some issues customizing the game. No matter what settings I try to change they all revert to defaults if I open the settings/options menu again.

This means: I can't get sound, my resolution is stuck at 800*600, I can't change controls, etc, etc. On top of that, even when I try to increase the resolution I get the message "Selected screen resolution is not supported by your monitor. Can't change status."

Any suggestions? I'm on Windows 7. I've tried running in administrator mode, I've tried running in XP compatibility mode, I've tried opening the game with a lower resolution. Is there a config file I can edit manually? It's a fun game but somewhat unfortunate to need to play it this crippled.