Sounds like a monitor problem rather than a driver problem
Try installing the new driver and running in 640x480. If you get no shadows, then bump up the resolution until you get shadows. Then drop one resolution back to no shadows. This is the highest your monitor can now do.
Unfortunately, this is a problem with CRT monitors - as they get older they get worse. Brand plays an important factor here - my 19" Hitachi is now pushing 4 years old and still looks clear as day, whereas my el-cheapo ADi monitor at work is 2 years old and can no longer display resolutions higher than 1024x768 due to ghosting
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