Okay, so you use a Radeon X1300. I don't know if this is related, but Radeon X1600-1900 series cards are unable to run the FS2_Open's implementation of GLSL in a stable way except with a rather old driver, and we're talking about Catalyst 6 series old driver here. Might be same sort of issues here, but I'm not completely sure.
For Windows XP, there is a quick dirty fix - installing the latest driver and then regurgitating an older driver's OpenGL DLL file into FS2_Open root directory.
Unfortunately for Vista and 7 users, this does not work because the DLL in question is a WinXP image, and thus Vista and 7 will complain that it is not a valid Windows image.
In other words, you're boned if this is the case.
Without a hardware upgrade you would have to revert to Windows XP or use -no_glsl command line option. The earlier is something I doubt you would be willing to do, and the latter will make the game work but without the latest graphical goodies like normal mapping and other eventual results of the shader system.
Maybe you should exchange some liquid currency to a new GPU. It doesn't even need to be particularly new; something like a GeForce 8800 GT would probably be fairly cheap these days and would be an upgrade from the Radeon X1300, and it would let you play the game to full extent quite easily.
EDIT: I am almost 100% positive that this is what you are experiencing. Read
this post to find out what's going on.
Basically, ATi did something a little different that they considered a better solution, and managed to make the drivers of the time so that they could tell their cards had Shader Model 3 support. Then later on they changed their drivers and the new drivers don't work the same as the old ones, so the FreeSpace shaders will not work correctly.
