Yeah, it complains if you've got 24-bit color. That's mostly for all cards. And it complains if you've got 32-bit color with voodoo-cards, since they don't support it. And the last thing is that you don't have the right version.
Goto the start-menu, run and type "dxdiag". Click OK.
You'll see your version of DirectX there. It's recommended that you have DX8 since N-Rage's input requires it.