SEGA's been trying to claim this is a user hardware issue, but it clearly isn't, as this fix has worked for me and a lot of other people. Some people have also fixed it by reinstalling.
Afterwards, you can change the other settings, and the textures will stay at the proper resolution. For some reason, if you set textures lower, it can permanently bug out the textures, and they won't respond to any of the texture resolution or rendering settings.
Before with "Simple Graphics" on Medium, Texture Resolution on "High"
After with "Simple Graphics" on Ultra and Texture Resolution on "High"