Hi,
I have a similar problem, my pc is P4 2.4 GHz, 768 MB RAM, ATI Radeon 9000 128 MB. The problem is that I also can't even load ArmA because my radeon 9000 doesn't support pixel shader 2.0. However, I'm playing Stalker (which also requires pixel shader 2.0) on minimal settings, getting 30-60 FPs and enjoying it a lot There are two ways to load Stalker: adding "-nodistort" to the shortcut or using D Analyzer and ticking "force max. pixel shader version 1.1".
Is there any similar solution to make ArmA run on my ATI Radeon 9000?