Minimum: 256 MB NVIDIA GeForce 6600 GT or better or ATI Radeon 1600 XT or better
You Have: Intel(R) Graphics Media Accelerator HD (Core i3)
Upgrade Suggested: Unfortunately, your Video Card does not meet this requirement. Click here to see some recommendations.
Features: Minimum attributes of your Video Card
Required You Have
Video RAM 256 MB 1.7 GB
Hardware T&L Yes Yes
Pixel Shader version 3.0 4.0
Vertex Shader version 3.0 4.0
You need 4 but you have 3. From what you wrote it looks like your using the onboard GPU found on the i3? Only way to fix it is to get a real video card. Onboard Intel GPUs are CRAP. They make good CPUs, but their GPUs are always behind AMD and Nvidia. Do you have a PCIe 16x slot on your motherboard?
Ah, I miss read the required you have, I thought it was you have required.
The only thing I can see is that it wants you to have a 6600GT or x1600 or better. It might detect your low end onboard as weaker. If it supports SM4 and you need SM3, they are backwards compatible so it should work. If you look at your first post it says you don't meet the requirement as soon as it mentions supported chips.
Fact remains you need a video card. Check your documentation or crack the case and look. (might void your warranty.) Only way to play.