When you say it looks bad, what do you mean. Is it being displayed in 4 colours? Is the background very blocky? (The background textures ARE very blocky).

I have been messing about in the settings trying to get mine to work properly. Even since upgrading to a nvidia 6600 from a 5600, I get lots of black holes everywhere in these backgound textures. I'll post a screeny to show what I mean. But, while mucking about in the setting I discovered you can force anti-aliasing if you make a profile for FF8. After this, the rendered bits (like the characters, fight scenes etc) are WAY better. unfortunately the text and menus go to pot, but hey i can live with that. Unfortunately, in all my mucking about I have not found out why the background textures are mucking out.
Will try and dowload the patch again...hopefully i downloaded the worng one. Very unlikely, but my last solution.