SH3 runs at 1024x786 and apparently some software monitors your system and informs you when you run a software that doesn´t use 1600x1050, the native screen resolution. The first thing I would do is to close the software that monitors the display resolution, it probably sits in the tray bar. Maybe it´s an option of the display driver that you need to switch off. Also install the latest DirectX software:
http://www.microsoft.com/downloads/d...0-6C67DCAA54BF
And update your video card driver.