If DoW2 is allowing you to set to low/medium settings only, but your PC can easily handle higher settings, then you can find a few things in here to fix this.
First would be to check if you have the necessary ServicePack for your Windows installed. For Vista that is SP1 and for WindowsXP SP2 is needed.
And you need to make sure you got the latest drivers for your graphic card, check these websites for an update:
nVidia
ATI
notebook graphic cards (nVidia)
