I found it. I was wrong on it being textures and lighting, it's transformation and lighting.
Version 2.01 Changes
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Added software vertex shading for video cards that do not support hardware transformation and lighting. There is an option in the video setup labled Hardware Vertex Shading. If your card does not support hardware T&L, this checkbox will be unchecked and grayed out. If your card does support it, you will normally want to leave this enabled.