You discovered a bug in the engine, and you are sure that it is not a problem of your code? Just post it in here. Please read the bug posting guidelines first.
The Irrlicht dll you are using has been linked with a version of the DirectX SDK that has a newer version of the shader compiler; this version does not support either VS1.x or PS1.x. It's still possible to compile SM1.x with the latest DXSDK but Irrlicht would have to use the "legacy" shader compiler.