Original post with workarounds/'solutions' was made here.
However, all solutions provided are workarounds.
The issue came into view with the latest generation of nVidia cards and updating drivers/Direct X doesn't solve the issue. The workarounds provided do temporarily solve it, however certain clients force close using some of those workarounds.
Toggling "/lightmap" does remove the black squares, however that doesn't fix the horrible sprites with their choppy edges.
A permanent solution is still to be sought after, possibly lies in the game client itself though. No real solution was provided on warp portal forums either, so there are no expectations ;p