at the highest setting the
water effect needs DX8 compliant video hardware to turn on the
bump-mapping effect, creating a sort of 3-D waves on the water
surface...

Hmmm.. I am pretty sure I am running DX8-complient video hardware, what
with a Radeon 8700 Pro card on board, yet I do not see any special effects
with the slider to the right. Perhaps this does work with the right sim or
driver settings but I have not taken the time to experiment with the
unlimited display permutations.

You should see it then, if not something is wrong indeed but with the
settings :-) It is better seen low over the water at dawn or dusk with
reflections turned on, you can then catch the waves on the surface...

---
Best
Katy Pluta

FS2004 FAQ at http://www.simflight.com/news5/modules.php?name=FAQ