I'm having the same issues, same error message on top of the initial screen, saying I don't have hardware openGL acceleration.
(if you're wondering: windows vista, 2 gig ram, ati mabolity radeon X1600 intel core duo processor T2300 1.66 GHz)
and I can say that having the latest drivers doesn't change anything at all, I checked it out, found out that I had all the latest, tried to run ps again, but gave the same result... (btw, there is another topic concerning this very same problem (
http://hydlaa.com/smf/index.php?topic=28876.0), in which it was suggested to edit a file r3dopenGL.cfg in the /planeshift/data/config folder, to turn off the texture compression, that didn't work either...)
edit: the error I'm getting in the first screen is:
crystalspace.canvas.openGLwin:
no hardware acceleration!