Pixel shaders rely on the graphic card GPU supporting them, and the drivers being installed. Make sure that you have the latest drivers installed for your card properly.
Shader 1.0 is too outdated. ATI 9250 actually supports Pixel shader 1.4 and Vertex shader 1.1. You could try the drivers from here:http://ati.amd.com/support/drivers/xp/radeonx-prer300-previous-xp.html
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