Your graphics card is too old for the game, or it doesn't have valid drivers installed. Tell me what card you have. You can find out by going start - run - dxdiag - display name
luckily, with v 3.8 of toribash non-shaded doesnt look that bad anymore. I play on a laptop or desktop, wichever is closer to me ( I'm really lazy xD). The laptop doesn't support shaders, but with 3.8 I don't really care anymore ;)