Demigod Looks Messed Up

My Demigod looks really messed up as you can see here. My computer specs should allow me to run it on low which is what its on right now. Its laggy and ugly.

Heres my specs.

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System Information
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Time of this report: 7/3/2009, 02:26:30
       Machine name: JUSTIN-84FF766A
   Operating System: Windows XP Home Edition (5.1, Build 2600) Service Pack 2 (2600.xpsp_sp2_rtm.040803-2158)
           Language: English (Regional Setting: English)
System Manufacturer: EMACHINES
       System Model: T3604
               BIOS: Default System BIOS
          Processor: Intel(R) Celeron(R) D CPU 3.33GHz
             Memory: 1022MB RAM
          Page File: 315MB used, 2144MB available
        Windows Dir: C:\WINDOWS
    DirectX Version: DirectX 9.0c (4.09.0000.0904)
DX Setup Parameters: Not found
     DxDiag Version: 5.03.2600.2180 32bit Unicode

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DxDiag Notes
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  DirectX Files Tab: No problems found.
      Display Tab 1: No problems found.
      Display Tab 2: No problems found.
        Sound Tab 1: No problems found.
          Music Tab: No problems found.
          Input Tab: No problems found.
        Network Tab: No problems found.

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DirectX Debug Levels
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Direct3D:    0/4 (n/a)
DirectDraw:  0/4 (retail)
DirectInput: 0/5 (n/a)
DirectMusic: 0/5 (n/a)
DirectPlay:  0/9 (retail)
DirectSound: 0/5 (retail)
DirectShow:  0/6 (retail)

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Display Devices
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        Card name: ATI Radeon X300/X550/X1050 Series
     Manufacturer: ATI Technologies Inc.
        Chip type: ATI Radeon Graphics Processor (0x5B60)
         DAC type: Internal DAC(400MHz)
       Device Key: Enum\PCI\VEN_1002&DEV_5B60&SUBSYS_06021002&REV_00
   Display Memory: 128.0 MB
     Current Mode: 1680 x 1050 (32 bit) (60Hz)
          Monitor: Plug and Play Monitor
  Monitor Max Res: 1600,1200