The game uses DirectX 9c, and DirectX 10 and up are not backwards compatible (but so far as I know not having that just makes the textures transparent).

Some people with similar issues in Ego Draconis:
http://www.larian.com/forums/ubbthreads.php?ubb=showflat&Number=419968#Post419968
http://www.larian.com/forums/ubbthreads.php?ubb=showflat&Number=409251&an=