After searching many forums and customer reviews online, I can only conclude that this is a widespread issue for users of ATI HDxxxx graphics cards. While the solution for the crash on startup issue for Steam customers with these cards has been worked around by using the AllGhosts mod and switching around some filenames to force Steam to load from it, the texture corruption on the level select screen and texture issues in game (missing eyes, weird lighting reactions on character hair and occasional full-screen glitches as you move the mouse and camera around) is still prevailant.
While none of these problems are game-breaking, when you reach The Calamityville Horror and find that there is a layer of black over the entire basement (you can watch people walk down the stairs and disappear gradually as they pass through it), it causes this particular level to be entirely frustrating and a great disappointment for a game I might otherwise be enjoying.
The game works fine on my SLI laptop, giving me something to compare what it should look like, but this is not down to ATI or a third-party modder to fix. This is clearly an issue with the way the game works with modern cards and it is up to the writers responsible to plug these issues.
Please, someone able to get things moving, read this and realise that without a patch to get this working on newer ATI cards, there will be tens of thousands of unhappy people who bought this in the Steam sale and cannot enjoy it. Your good name and reputation is at stake.
Looks like the pestering has paid off! Earlier today saw the release of the Catalyst 10.7, which I was disappointed to not see this issue addressed. HOWEVER! A quick search later (Thanks Iviv!) threw up this interesting beta driver specifically geared towards OpenGL 4.0 issues.
I have tested this driver with Ghost Master and found it to fix all the issues I encountered. I only hope more people find that or this post pointing to it and enjoy this game as it was meant to be.
As an aside, I spent a good few days copying 'opengl32.dll' from various people and various versions of the Catalyst driver suite onto my machine (Win 7 x86). Only versions of this DLL from XP machines (NVidia and ATI) removed the graphical issues, though they did run at less than 1FPS. I've been working on finding a replacement for the ATI component of OpenGL for a while, working on a hunch that these issues came about perhaps because this game does not conform exactly to OpenGL 3.3 specifications, thus breaking it now we have version 4.0.
For anyone unsure if you need this fix, I have constructed a list of bugs I have personally encountered. I have checked these all and they appear to now work fine with the above beta driver:
1 Mission select screen has no texture, or substituted texture. 2 Calamityville Horror map has solid, black texture over it, making it appear black. 3 Hospital map has 50% opacity on a black texture over it, making it appear darker than it should. 4 'Retexturing' weather effects (ice, inferno) cause major texture corruption, missing textures and missing polygons. 5 The ghoul room is missing all green circle indicators under ghost standing areas. 6 General issues regarding textures and effects when certain ghost powers are used. 7 No character eye texture. 8 Character textures (hair and 'eyes' especially) do not react to changes in lighting colour or level and appear to glitch the textures from certain camera angles.
Good luck to all and thanks to everyone who has helped bring these issues to the attention of ATI. Peace and happy haunting!