display hardware is not capable of color-space conversions.
 

display hardware is not capable of color-space conversions. switching to RGB

What videocard do you have ?
Did you enabled preview in windows explorer ?

I got the same message with my ET4000/W32 card
 

I got the same message with my ET4000/W32 card

An 1 MB videocard can't do that. Try upgrading.

It isn't 1MB
 

it have 2MB RAM onboard
btw is this done on hardware or software?
maybe the video chip itself doesn't support this feature

MB means Mega Bytes. Is the memory and is a hardware component (an integrated circuit ).
I managed to get things working on an 2 MB video card (S3 trio 64 V+) using 640x480@256. Give it a try, see what happends.

didn't meant this ;)
 

I asked about the "color-space conversions" feature, i know what MB means :)

I, don't know if chip can do that, but try what I have said about 640x480@256, see if it works. Color conversion is used to convert from RGB to YUY or YUV which are less CPU consumming, and is made by the video card. Bu yours, is a very, very old videocard.