(I updated this post) It does the same error from windows install and from desura launch.
Windows 7 x64, dual monitor, radeon 7970 - latest drivers (13.3 i think)
Log
Faulting application name: Knytt Underground.exe, version: 1.0.0.0, time stamp: 0x50d159b4
Faulting module name: atioglxx.dll, version: 6.14.10.12172, time stamp: 0x514233af
Exception code: 0xc0000094
Fault offset: 0x00eedba8
Faulting process id: 0x660
Faulting application start time: 0x01ce39399a157e48
Faulting application path: C:\Program Files (x86)\Desura\Common\knytt-underground\Knytt Underground.exe
Faulting module path: C:\Windows\system32\atioglxx.dll
Report Id: d8fe1fe2-a52c-11e2-a8a3-0025229f74dd