I think the lagginess has to do with the font since all the laggy segments are in menus with a lot of text (journal, stat screen, character creation). I tried to change the font (since this solved a similar problem with Gothic 3) but it caused the game to crash.

Did you try changing the forcegdi=0 to forcegdi=0 in the cfg_default.ini file? I fixes all the lag issues for half of the users, somewhy it doesn't seem to work for everyone, though.

Are you running an ATI or a nVidia card?

I'm on a nVidia 9800M GTS. Pretty speedy laptop too which can run just about everything smoothly at max settings.

Well it works for me and I'm running on an ATI card. Might have something to do with that, then.

Have you checked that you have the latest drivers for your video card? Also, try changing both the texture quality and mipmap quality to Performance.

Hey Goldennugget, I remember that problem with Gothic 3, that font caused it to run at like 1-2 fps, terrible really.
Speaking about Arx, having purchased version 1.19 from GoG I encountered the same font lag as many others here (almost impossible to allocate points, it's so severe). In fact, I *did* replace the original True Type fonts with several system fonts (Belli, Arial, etc). The game ran as usual (fonts did change visually), however the lag remained.
I read forums tracing slow font rendering as far back as version 1.17...

Modern video cards cannot handle low resolution stuff properly anymore - nowadays they are optimized for high resolution.
So, instead of taking the resolutions down to 800*600 and 1024*768, knock it up to 1600*1200, 1920*1200 or so.
Worked with my 8800GTX in many cases, though I do not have slowdowns in Arx Fatalis.

If anyone is interested, there is one way to limit the effects of the text slow down problem.
Using arxpak, I found a file that basically contains all of the lines of text ever used in the game. It also contains a few settings for the size of fonts, but none of them seem to have any effect on the performance, no matter how large or small the fonts are.
What is useful about this file is that you can edit any of the entries so that they are blank. For example, find this:
[player_dbldmg]
String="DOUBLE DAMAGE!!!!"
and change it to:
[player_dbldmg]
String=""
I've tested this and it gets rid of the popup message DOUBLE DAMAGE!!!! and it stops the game from slowing down when you make a critical hit. I also tried deleting specific tutorial messages (which I didn't really need anyway) and it gets rid of them completely.
The most important fix is probably the battle messages though, since you can get rid of the slow downs when you get double damage or a backstab.
I still have to play the game at a much lower resolution (1024x768) than I should have to so it stays smooth when I mouse over an item or open a menu, but with this text fix, the battles shouldn't have any interruptions due to laggy text popup messages.
I've put the unedited file into a .zip, and uploaded it here:
http://www.megaupload.com/?d=9YSPBJ09
Simply extract the LOCALIZATION folder with the Utext_English.ini file to your Arx main directory. Any changes you make to the file will take effect immediately. Remember, I haven't made any changes to this file, because I don't know which things you'd want to remove. Use my examples above if you want to edit it yourself.
If anyone has the time to go through and rid the game of any unnecessary text message pop ups (please don't remove anything that adds to atmosphere or gameplay in any way) it would definitely be a great service to Arx fans everywhere.
Also, I'm sure this applies to other languages as well. Just download arxpak and extract the utext file for the localization of your choice. Get arxpak here: http://teachsolaisgames.com/utils/ArxPakFull.zip
I just thought I'd post this since its the only thing I could find that had any effect on this problem. I tried swapping out the arx font file with .ttf and.fon files from windows, changing a ton of font related settings in windows... nothing fixed it.
So, I hope this helps some of you guys.
BTW, I'm running Vista Ultimate x64
Core 2 Duo overclocked to 3.6Ghz
EVGA Geforce GTX 260 192sp 896Mb (also overclocked)
Nvidia Forceware 190.15 drivers
4Gb DDR2-1066
X-Fi Xtrememusic (using ALchemy to get 3D sound and EAX back in Arx under Vista... works great!)
I have no other issues with the game at all. No super speed movement or glitches of any kind other than the stuttering when text shows up.

Just played the game for a while and I did run into a few areas that were choppy\laggy without any text on screen. It seemed to happen when highlighting objects or looking across a wide open area. So I opened cfg_default.ini and switched forcegdi=1 to =0. It fixed the problem!
I still get the laggy text, but after disabling gdi and removing a few of those text lines from the file in my previous post now I'm actually playing the game at 1600x1200 with no significant lag while moving around or fighting! Once the tutorial messages are mostly over with, the only time you'll see lots of text is when reading your journal or a note, or looking at your character sheet. Basically, the framerate lag won't cause a problem unless you have a habit of reading books\notes while fleeing from enemies.
Also, I highly recommend installing Creative ALchemy if you have an X-Fi sound card. This game sounds incredible with EAX enabled. One of the best examples of EAX I've ever heard.
And one last thing... I can't seem to enable anti-aliasing. When I do, it removes all of the numbers from the character sheet. But since I can run at 1600x1200 now, I don't need it. The game actually looks pretty good at that res with 16x anisotropic filtering. :)
EDIT: Here is the edited Utext_english.ini file that I'm using:
http://www.megaupload.com/?d=C8ZM41FG
It should get rid of several of the needless captions or popup text messages (like Backstab! or Double Damage!) which should make the text lag far less noticeable while fighting (the most important time to have smooth framerates). Just extract the zip to your Arx folder and it should work.

Thank you very much, CatpNKILL!
yours is the first useful advice in this thread, you're actually tried to deal with the font slowdown problem (and while doing it you confirmed that it is indeed font rendering that causes slowdowns). Although yours is only a stop gap solution, I'm sure this issue will be solved someday. Moreover, I haven't given Arxpack a try yet. Perhaps I'll find some clues to eliminate this problem for good... )

Well, it figures... right when I started getting into this game it crashed with a memory error and I think it actually screwed up something in my Windows install.
My system wouldn't shut down properly and now I can't enable EAX... no matter what I do!
I've reinstalled the game and all of my sound drivers, wiping every trace of creative\alchemy or Arx off of my system and I can't get EAX back. It worked beautifully before and sounded incredible.
This really irritates me. I was all set to get back into this game and now it actually borked my system...

Have you reinstalled OpenAL? ALchemy converts DirectSound/EAX to OpenAL. A new version of OpenAL was released only a month or so ago, so if you are using the old version you could try updating it.

Yeah I tried.
Actually, I just formatted and reinstalled windows and I still can't get the game to use ALchemy and EAX. :|
I'm getting pretty pissed off now... LOL
It sounded so good that I don't want to play the game until I get it back.
At least I have a fresh clean Windows install now...
****EDIT: Holy crap I fixed the EAX problem!
I used RightMark 3DSound to test to see if EAX was working at all and it was working great (using ALchemy).
So I knew that it had to be related to the game. I looked around online and read about this game (and some others) requiring an EAX "unified" driver. I found the eax.dll at dll-files.com:
http://www.dll-files.com/dllindex/dll-files.shtml?eax
I put it into my windows\syswow64 folder, tried the game and nothing had changed.
I figured I should try registering the dll (most dlls need to be registered before windows will use them). So I ran regsrv32 at the command prompt and registered it.
EAX works perfectly in Arx now using ALchemy! :)
The driver must have been corrupted or unregistered by windows when the game crashed.
For anyone else having this problem, just follow the link above, download that zip file and extract the eax.dll to c:\windows\system32 (for most operating systems) or c:\windows\syswow64 for Vista x64 (and possibly XP x64).
Go open the command prompt (or the Run command in the start menu) and type the following:
regsvr32 c:\windows\syswow64\eax.dll
Obviously, change the path if you aren't on a 64-bit OS.
As long as you're using an X-Fi or Audigy 2 with ALchemy in Vista\Windows7 or using any kind of Soundblaster Live, Audigy or X-Fi in XP, it should work fine. :)