I have done some testing with the in-game settings presets (Speed, Balanced and Quality). The machine I tested this on has these specifications:

P4 2.4 Ghz
Asus P4B 533 motherboard
1 Gb pc2100 ram
GeForce ti4200 128 Mb (NVIDIA 61.77 drivers)
Egosys Waveterminal audio (definitely not suited for gaming)
Windows XP SP2, DirectX 9.0c

I did three tests. In every test I would reboot the pc, start Rome: Total War, put the resolutions at 1024x786 for both battle and strategy modes, load one of the settings presets and start a new campaign as the Julii, and use the first Senate Assignment to capture Segesta as a test for the battle mode. Below are the results for each of the settings presets

Speed Setting
No lag, no graphics anomalies, no audio anomalies and no choppy performance in any way

Balanced Setting
No lag, no graphics anomalies, no audio anomalies and no choppy performance in any way

Quality Setting
No issues in the strategy portion. No mouse lag, no slowdowns, everything looked fine to me.
In battle mode it's a different story. At first my soundcard stuttered and kept repeating one short audio part. I alt-tabbed out of the game and reset my audio card (that's a thing I don't know how to do on a Soundblaster card). After that the sound played fine again. I experienced serious mouse lag and stuttering gameplay performance. By turning some settings from high to medium or below I managed to make the battle playable again and finished the battle without any performance issues. The mouse lag had gone as well.

The system I am using is not bad. I would rate it medium specs overall. The main issue with the quality settings is the Huge setting for units. Huge units means 160 troops instead of the 40 at the normal setting. This gives the AI 4 times as many troops to do calculations for, and the video card 4 times as many troops to display. This and the combination of other settings in the Quality preset put too much strain on my system. The audio card stutter clearly shows that the data bus on my system was overloaded. Resetting it cleared some resources, which made it playable. But if you don't have the option to reset an audio card, there's nothing you can do and I would expect that if I don't reset, the battle would crash shortly afterwards.
I conclude that it's asking for trouble to ask too much of your system. As a result, I recommend to keep the units size to normal unless you have a mighty pc (P4 3 Ghz, 1 Gb ram, GeForce 6800 or Ati X800). Even then, huge units with all settings high, and medium or high AntiAliasing settings may still cause problems. On anything below that mighty pc, keep units on normal, AntiAliasing to Low or Off, and be conservative with all the other graphics settings. Also, keep audio set to use the Miles Fast 2D Positional Audio engine. You'll still have a good game with decent graphics and sound and a good chance to avoid the reported problems.


Second test

To make sure about the audio card bottleneck, I started the game, loaded the Quality preset again, but this time disabled audio in the audio options. I did 2 tests after that:

1 - Start the campaign and play the Segesta battle
This all went fine with no noticeable performance problems, both in the strategy portion and the battle. I'd like to note at this point that I do expect problems with bigger battles, especially with big cities on the map, because of the BUILDING_DETAIL set to HIGH. I recommend setting that at the NORMAL level.

2 - Play a big battle
For this I set up a custom battle with 4 armies, all units chosen and also using all the different units available. Again, the battle played without any noticeable performance slowdown. Same as above though, when a big city is on the map I am fairly sure that it will slow down considerably with the Building detail set to anything above normal


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