I've got a very similar issue, but I'm freezing during the demo's game intro after selecting "New Game". It loads up the video showing the envelope on the doorstep, and then freezes. Here is the end of my hpl.log:
User Initialization
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Trying to load vertex program!
Success!
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Game Running
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WARNING: Could not find language file entry 'Show Crosshair:'
I have to exit out the same way -- Ctrl-Alt-F1 and give the kill -kill <PID> command. A regular kill <PID> command doesn't cut it. Is this the same issue, or something different?