2d Sprites Have Many Errors

[Funkstar De Lux]

I'm using the latest version of PJ64 and Jobo's Direc3D8 plugin (1280x1024, FSAA 6X and AF 16X). I'm running a shitty ATI Radeon x600.
My problem is that the sprites in many game look HORRIBLE. Black out lines, segmented etc...
Can I do something to stop this or improve on it?

See pic for example.

 

[Agozer]

Uncheck 'Always Use Texture Filter'. You won't get the lines or the blurry outlines, but the image will be more pixelated.