Nebula Model 2 Emulator Black and White Graphics Problem

I've been trying to get my model 2 emulator working for about a week now, but it is horribly laggy and some of the graphics appear in black and white. I have the emulator working on another computer and it works flawlessly. Does anybody know why this problem occurs? I've been reading about it and it seems that it is usually caused by a lack of pixel shading 2.0, but as far as I know my card has it. Thanks!

Here are my computers specs

Windows Vista (32 bit)
Video Card - ATI Radeon X850 XT
Memory - 4g
CPU - Intel Pentium 4 2.66GHz

Update your card drivers to the latest version and re-install Direct-X. Usually issues like this are driver related where its not a compatibility issue and the card isn't faulty.