My apologies on bringing back an old post, but I just had this problem and wanted to see if it was ever resolved. It's been a while since i ran leadwerks, but i wanted to try something out, so i booted it up and everything went well. I started a new project and when i ran to test it i get:
Failed to create background context.
Failed to initialize graphics. Please ensure your graphics hardware is compatible and install new graphics drivers.
I tried updating all of my drivers and it still does not work. I am running on geforce 640m with driver version 358.91, It is an old machine, but it always worked in the past. Did you have any luck with this HAL?