I don't see real error in the way you do it, but its long time since i've used DelphiX (i bet that's the case for most here).
Which version of DelphiX or UnDelphiX are you using? It bacame a little different after the hardware acceleration change in UnDelphiX and some things didn't work same way as before. Old one was direct, new one needs to update the texture in video memory. (If Restore doesn't do it, its propably bugged. But i don't really know.)
Also, you are using event onDisplayInitialize(), was there something like onInitializeSurface()?
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