UPDATE: Resolved. The Intel drivers default to setting two compression methods (shown in the attached screenshot) to "forced". Sculpted prim textures shouldn't be compressed. Disabling S3TC and FXT1 compression (or just setting it to NOT be forced) in the Intel graphics settings will solve the problem. Check Pazako Karu's post for directions on how to get to this menu.
=== OLD INFO ===
For reasons unknown, Sculpted prims do not load their sculpted component on computers using an Intel 965-based graphics card. This leaves sculpted prims appearing as spheres of varying dimensions. No settings tweaks uncovered thus far (including disabling Object Occlusion) seem to be able to fix the issue.
Repro (if you really need one):
1. Buy an Intel 965 chipset graphics card
2. Install it in your computer
3. Install Second Life
4. Run Second Life
NOTE: This is a duplicate of VWR-12512, which cannot be re-opened (from "Needs More Info" status) due to having zero votes.
Please try the latest RC Viewer Second Life 1.23.4 (123523) Jun 9 2009 08:32:14 (Second Life Release Candidate) which can be downloaded from here Release Candidate Test Viewers
If you still have an issue, please add your full computer environment, Help > About Second Life [copy and paste], including the Second Life Viewer you are using and the Region(s) where you have this issue. Please also include the Graphics Card driver version you have and a screenshot of your issue.
Thank you : )