New Video card did the trick!!
The ATI HD 5770 solved the rendering problem as seen in OP's screen-shot. It would have been nice to fix with a setting or a patch...oh well.
My personal opinion is that the "ATI Radeon x1950 XT" is NOT compatible with Divinity II.
~Pete
P.S. Or maybe ATI Catalyst version 10.2 is not compatible and ATI Catalyst version 10.3 is???
Last edited by Rasstis; 24/04/10 03:09 AM. Reason: Added information