I figure I'll just rap up everything we tried just in case this doesn't work for someone else. The following list is a list of things you can try if the above solution does not fix the issue. (Note: Both myself and Z. P. Wilson tried each of these BEFORE finding the issue was with ACRE2, this list is primarily for if the above solution doesn't fix your issue)
First of all, you should refrence your Arma3 RPT files and try to see if its a mod issue (Found at C:\Users\YOURNAME\AppData\Local\Arma 3 You should be able to see files with the file extension .rpt)
Re-install your DirectX (Found at \steamapps\common\Arma 3\_CommonRedist\DirectX\Jun2010 | DXSETUP.exe)
Completely uninstall (Do so via the control panel) and re-install your graphics card drivers (In this case it was Nvidia Drivers but I assume the issue can occur while using an AMD Card)
These first steps seemed to fix the error code: 0x00000001 – UNABLE_TO_INIT_DXGI
However after this issue was solved we found an new error code: 0xCFFFFFFF - STATUS_APPLICATION_HANG.
When this issue popped up this is what we tried:
Go to your Arma 3 Folder and go to a folder called DLL and delete the files there ending with a .dll file extension. (Found at \steamapps\common\Arma 3\Dll) then go to steam, right click, go to properties, go to local files, click verify integrity of game cache and wait.
Open CMD Prompt as Administrator and type sfc /scannow . When thats done you should see something like this
After this point I remember to check the RPT files and we found the root cause and we found out it was ACRE2 that was causing the problem.
I posted this trouble shooting list for those who cant fix their Arma/ACRE2 issues via the method posted by @SNA Z. P. Wilson. I hope this helps anyone else having trouble with their games.
Regards
Cpl Flavin