What card do you have currently? If it's integrated, chances are you're missing pixel shading.
The minimum specs for Silent Hill are:
Windows XP/ME/2000/98
1.0 GHz Pentium III or Athlon processor (or equivalent)
256 MB RAM
GeForce3 Ti/Radeon 8500 Video Chipset w/32MB VRAM
DirectX 8.1b
DirectX 8.1 compliant sound card
2x DVD-ROM drive
3.0 GB free hard disk space
RECOMMENDED SYSTEM REQUIREMENTS
Windows XP/2000
2.0 GHz Pentium 4 or Athlon processor
512 MB RAM
GeForce4 Ti/Radeon 8500 Video Chipset w/64MB VRAM
4x DVD-ROM drive
3.7 GB free hard disk space
USB Gamepad controller
NOTE: It may be necessary to update your hardware drivers.
Supported video chipsets:
NVIDIA GeForceFX, GeForce4Ti, GeForce3Ti (GeForce MX series not supported.)
ATI Radeon 9800, 9700, 9600, 9500, 9200, 9100, 9000, 8500
(
http://support2.vugames.com/konami/answer.aspx?ID=7165)