Certain cards that, according to XNA Framework 4's requirements, should be able to run XNA Framework 4 software are found to be incompatible when attempting to run it.
For example, attempting to run Terraria using an ATI Radeon 9250 (which supports Shader Model 1.1) generates an error message instead. This also happens with the more recent Radeon HD 3200. It may be specific to Windows XP, and there may be more cards that will cause the error.
A similar message is generated for the GeForce FX 5700LE:
"No suitable graphics card found. Unable to create the graphics device."