-W3D is not the solution here. It's a command line option for supporting very old 3D hardware, like Riva TNT2. Your 3D hardware is quite recent.

It could be a hardware fault on the 3D card, or a yet unknown driver issue.

WED won't run under the free version of lite-C. But you could install and try MED. Can you run any other 3D applications, for instance the demos on the download page?