Found this post by Jarrstin to be usefull:
I've managed to fix the problem. According to Lucasarts' website, it says that for the Geforece FX series it suggests the following:
- Force MipMaps=Trilinear
- Conformant Texture Clamp=On
- Extension Limit=Off
Well since it is a Geforce card (though not an FX) I gave this a try but it didn't work. So I decided to play around with these and instead I set the first two to Application Controlled and set Force MipMaps to Bilinear and it worked!