HW T&L stands for Hardware Transform and Lighting. It is a graphics capability available on many of today's video graphics adapters. HW T&L essentially offloads some of the graphics processing from your computer's main CPU chip to the graphics adapter's chip, freeing up the CPU to process additional instructions, which makes programs execute faster.
If you've got a graphics adapter that supports HW T&L, you should be able to enable OFP's T&L support by running the OFP preferences program, OPFLASHPREFERENCES.EXE, and selecting an appropriate HW T&L entry in the DISPLAY TYPE drop-down list. If your graphics adapter doesn't support HW T&L or if you experience problems using OFP's HW T&L support, choose an non-HW T&L based setting in the DISPLAY TYPE list.
BIS has stated that there were HW T&L related bugs in versions 1.00 and 1.10. As for version 1.20, they have corrected a number of these problems but some folks may still experience problems, which may be caused by OFP, by the video drivers installed on your system or even by problems in DirectX 8.0. It's pot luck but, if you can, give it a try.