I'm using Dell Inpiron 1525. However, in my Resource CD Drivers section, there is an "Intel Mobile Chipset Driver" in "Chipset Drivers" section and an "Intel G965 Express Chipset Family" in "Video Drivers" section - there is nothing said about GMA x3100.
Following a guide from intel.com, I've found out:
Disabling the shadows didn't fix the problem. Looks like, as EtherealN says, it is a lacking shader support. Probably in other games, where I had shadows problem, disabling shadows caused some unstable shaders to disable too.
OR the problem could be in "AGP status" that is somehow disabled and unavailable in Windows XP and enabled in Windows Vista - causing textures to warp incorrectly and/or polygons vertexes to be in an incorrect position. Unfortunately, I can't find the usual "disable" buttons that group of settings in DxDiag - seems like they have removed them in DirectX 10. Too bad.
DxDiag report:
DxDiag.txt
Thank you anyway.