Error compiling ps_2_0 warp shader

[MrNobodyWTB]

My problem:

I can't even get Milkdrop to run (running latest winamp version)

error:

Error compiling ps_2_0 warp shader:

Your hardware says that it supports shader model 3.0 [PSVersion=0x300],
but it doesn't seem to do it properly -
maybe your display driver is just buggy.

You might want to try updating your display driver
to the latest WHQL driver from the chipset manufacturer
(Nvidia, ATI, etc.)

***

I've updated to latest graphics drivers etc and I still get the same error, any help would be greatly appreciated (updated to latest from ASUS, ATI tells me to go to the maker of the laptop for updated graphics)

I have an ASUS K52Jr (also advertised as an A52Jr)

ATI M Radeon 5470 1GB
Intel Core i5 430m
4GB DDR3
Windows 7 Home Premium


again, thank you for any help