Does "enable decoding of indexed textures ( using CLUT ) have to make graphic ugly ?

[Sarisa81]

For Dissidia 012, the picture is less pixellated now, but the missing texture problem is far worse. The screenshots don't precisely match but they should show the issue.

My graphics card is AMD Mobility Radeon 545v (4500 series) and I'm using these settings:
[ ] Disable VBO (automatically disabled if not supported)
[X] Only GE graphics (not recommended for homebrew)
[X] Use vertex cache
[X] Use shaders
[X] Use a Geometry Shader for 2D rendering (only relevant when using shaders)
[X] Disable UBO (automatically disabled if not supported, only relevant when using shaders)
[ ] Enable VAO (only relevant when using shaders and vertex cache)
[X] Enable saving GE screen to Textures instead of Memory
[X] Enable decoding of indexed textures (using CLUT) in shader (only relevant when using shaders)
[X] Enable dynamic shader generation (only relevant when using shaders, recommended for AMD/ATI)
[ ] Enable the shader implementation for the "Stencil Test" (more accurate but slower)
[ ] Enable the shader implementation for the "Color Mask" (more accurate but slower)
[ ] Disable optimized VertexInfo reading (may improve compatibility)
[ ] Save Stencil to Memory (more accurate but slower)
[ ] Use Software Rendering (very experimental, not yet complete, slow)

My driver version is 8.97.100.7 and my Catalyst version is 13.1.