I've found that XVidMode is required for gamma control, and that it defaults to off. There are two bug reports about gamma. One is Diablo 2 as it fails to run at all in D3D mode because of it (and with a cryptic error too). The other is the gamma slider fails to produce the effect. There are three ways to fix the problem: 1) Allow XVidMode to init for gamma control regardless the setting of UseXVidMode. I already sent a patch for this.
2) Make UseXVidMode default to "Y".
3) Tell people to set UseXVidMode manually.
Let me know what any of you think is best. I'd prefer the first one so that I won't have people scratching their heads over what is going on. Though #2 might be more correct than #1. Something should be changed because it's silly that Diablo 2 cannot run by default.
Jesse