The PCIe x16 slot on this computer can only be used for a graphics card.
Check the specifications:
Slot 1: Full length, full height PCI Express x16 (graphics only)
Slot 2: Full length, full height PCI Express x1
Slot 2: Full length, full height 32-bit PCI 2.3 (5v)
Slot 3: Full length, full height 32-bit PCI 2.3 (5v)
This is a chipset limitation. From Intel's Q965 technical specifications:
The Intel Q965 Express chipset contains two separate, mutually exclusive graphics options. Either the GMA 3000 graphics controller (contained within the 82Q965 GMCH) is used, or a PCI Express x16 add-in card can be used. When a PCI Express x16 add-in card is installed, the GMA 3000 graphics controller is disabled.
Effectively, there's a switch inside the northbridge that connects the PCIe lanes to either the internal graphics hardware or the PCIe x16 slot. In order to allow external graphics cards to work, the slot has priority. So by putting a device in the slot, you disconnected the internal graphics, leaving you with no video device.