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saluk: And to the above naysayers, it's very common for updates to drivers to hurt compatibility with older games. Being able to run borderlands for example, makes sense, because the driver developers probably have borderlands and other unreal engine games in mind when they make optimizations. I doubt anyone at ati tests their updated drivers on Psychonauts :)
In my experience it can go both ways... newer drivers can just as often fix weird problems like this as they can cause them. I usually recommend updating drivers first, and if that doesn't help, then one can try rolling back to older drivers. The only problem with rolling back is figuring out which old version to use.

You are right, of course, that ATI is not testing the new drivers on old games, but it still seems fairly common for new drivers to fix issues in older games as well.
It seems turning off the shadows, solved the problem. It kinds sucks though, since having shadows is important in a platformer.
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Roberttitus: I have a Compaq Presario CQ62-238DX Notebook PC

ATI Mobility Radeon HD 4250 graphics
AMD Athlon II 2.1 GHz dual-core processor P320
3GB DDR3 RAM (With over a GB of VRAM)
Windows 7 Home Premium (64 Bit)

Granted it isn't the greatest PC of all time or anything, but it should be able to easily run this game at maximum settings according to most sources that I have looked at (including this very site).

requirements: Windows XP or Windows Vista, 1 GHz Processor (1.4 GHz recommended), 256MB RAM (512 recommended), 3D graphics card compatible with DirectX 7 (compatible with DirectX 9 recommended), Mouse, Keyboard.


My PC meets every single one of those requirements, so why in the world am I meeting such intense slowdown in parts of the game (Granted, it isn't constant & doesn't happen everywhere, but the fact that it is happeing at all is incredibly annoying). Even on some of the lower settings I am met with slowdown... granted nowhere near as bad, but still enough to be annoying (especially considering that this is a platformer).
Make sure Vsinc is off.
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BoomGroinshot: Make sure Vsinc is off.
This question was posted over 6 months ago.... & people have already recommended what you recommended before. So with all due respect, why in the name of ass would you revive it just to tell me that?