I encountered almost the same problem here. But I don't have a PPF Patch for Wipeout 3 (don't know where and how to find it). And my problem is, that the game won't even start if I choose a track.
Option Mode works fine, you can do everything, unless you start a race.
Perhaps this is helpful:
System:
Windows 2000 - including Service Pack 2
AMD Duron 900Mhz, 512 MB Ram
Creative Live 5.1 Soundblaster
Guillemot Maxigamer Phoenix, 16MB VGA Card, Voodo Banshee Chip
LG 8080 DVD Drive
PSJoy USB Adaptar with Digital Pad plugged in (ePSXe Configured)
Plugins:
Video: Pete's DX6 D3D Driver 1.63
Audio: ePSXe SPU core 1.5.2.
CDROM: Pete's CDR ASPI/IOCTL Driver 1.10
Country: Auto Detect
Everything else on Defaults
Here's a Snap of my Video Conig:
Videoconfig
Here's a Snao of my CDROM Config:
CD-Config