There is a mod called ENB, It's a graphics enhancer. Sadly the developers blocked the dll, Sending you to story mode.
Go inside your gta files and find something like d3d8.dll d3d9.dll and place these two .dll's in a blank folder, this will solve the issue.
I would look into downloading the enb mod for gta III "only to ensure you remove all of the files".
# Comes with the cool x box mod installer,
Firstly:: I own the game for ps2, As far as making copies its legal as I am an owner, I cant sell give etc.
I have been lazy with it but as soon as I get these .txd files for the ps2 gta3 to open I plan on burning a extra copy for my ps2, As I can manually install all of the x-box txd/images to the burnt game, How funny would this be if I ever get the durn files to open and play the x-box edition on the ps2