I got msgbox "Photoshop has encountered a problem with display driver,and has temporairly disabled enhancements which use the graphics hardware"
This comes on 1st launch only
after that it dissappears
This is a result of the GPU Snifter.
The GPU Sniffer
To help guard against Photoshop crashes related to bad GPU hardware or drivers, Photoshop employs a small program called the GPU Sniffer. Every time Photoshop is launched, Photoshop launches the sniffer. The sniffer runs rudimentary tests of the GPU and reports the results to Photoshop. If the sniffer crashes or reports a failure status to Photoshop, Photoshop will not use the GPU. The Use Graphics Hardware checkbox in the Performance panel of the Preferences will be unchecked and disabled.
The first time the sniffer fails, Photoshop will display a dialog indicating that it has detected a problem with the GPU. On subsequent launches the dialog will not appear unless the Photoshop preferences are reset.
If the user corrects the problem, either by replacing the video card or by updating the driver, then the sniffer will pass on the next launch and the Use Graphics Hardware checkbox will be enabled and returned to its previous state (enabled or disabled).
So need a better GPU/driver.
i installed app on Virtual machine having memory 1024MB.
What virtualization package are you running?
With that package, what OpenGL support does your VM guest environment see? Not all virtualization systems provide proper OpenGL support to allow Photoshop to use the virtual GPU.