No, this is 100% a hardware issue. The graphics processing unit and connections on your computer are too old to support multiple rendering passes and advanced shader models (2.0+).

Solution:
-Unfortunatley the only solution is to get an entirely new computer. The multiple rendering pass problem is caused by the slow speed of the computers graphics bus. The actual card is responcible for the incorrect z-buffer coords and artifacts.

Even if your computer is brand new, it could still be equiped with older graphics technology (if it is marketed for business or value).

-Mike-