Then edit the g3e.ini and make sure it says 'Shader.CurrentShaderVersion=3_0 '. Regarding your rig and resolution, I'd try to lower AF first and maybe go as far as switch to bilinear filtering and turn off depth of field. The game is elsewise performing much better after that battle (and in other battles, too) with a rather steady 20-25 FPS on average on my AMD XP 3200+ (slower than your CPU), 2048MB RAM (even), GeForce 7800GS (marginally better than your card) at 1280x1024 with all details maxed except anisotropic filtering (which I've set to the lowest, i.e. That fight was stuttering like hell on my machine as well (since the game keeps loading/streaming stuff into RAM even when it's 'officially done' loading). Hmmm… I wouldn't base my impressions of overall performance on that first fight.
