It is known that the Native Xperia Play emulator isn't completely compatible with all the PS1 games. You can see graphical glitches everywhere. In fact you can use FPse which is a better emulator (and has got the "Dual Shock" to boot). But I've had a problem with it. I couldn't play Silent Hill, because it had sound issues.
I wanted to play this game, so had to use the ISO to Play converter (Awesome tool by yifanlu) and had a bit of a problem with the graphics. Squares surrounding the character, trees, basically every model.
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UGLY!
So, I read that it's been using the Hardware Renderer. But you can change it.
First of all download a notepad clone (I'm using Jota Text Editor, simple but as good as notepad) and open preferences.xml in the ucc folder, inside the game's content.
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The highlighted folder, is Silent Hill. Make sure to remember the game's id and open it. There's a ucc folder and if it isn't there, play the game first and access the Emulator's settings. It should appear.
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I've opened the ucc folder and there's some random hexadecimal code as the next folder's name. Open it and there are some .xml files. Now open preferences.xml.
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By default, the game is using the Hardware renderer, as the highlighted line says "SW-Renderer = False" all you have to do is to change it to true and save.
Now enjoy a much better looking emulated PS1 game.
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It probably won't work with all games, but will make the native emulator a much more enjoyable emulator. There will be a bit of dithering and the gameplay will be just a bit slower than the Hardware Rendering, but at least you can play the game.