Thanks for the reply. I did some more testing:
1024x768 = OK, game restarts in fullscreen
1280x1024 = OK, game restarts in fullscreen
1152x864 not OK, restarting always reverts to windowed 1024x768. GraphicsSettingsDX9.ini gets changed when restarting after choosing 1152x768 in graphics options.
Looks like i'll just use 1280x1024.