guitarxe: I'm not sure if this is just how the game draws shadows, but instead of it being like, solid dark shapes it seems like the shadows are made up of hundreds or thousands of tiny small dots. Is that how it's supposed to be?
What you're describing sounds like dithering. Something the developer needed to use with the gaming hardware of the time in order to hit their performance target. So yes, it is on purpose.
What you can try out is make a backup, then edit a file called User.ini located in your (Documents)\Witcher 2\Config folder.
Look for the parameters,
MaxCubeShadowSize and MaxSpotShadowSize. Be sure they're both set to 2048 so
MaxCubeShadowCount=3
MaxCubeShadowSize=2048
MaxSpotShadowCount=3
MaxSpotShadowSize=2048
It may make the dithering less pronounced.
If you don't have the GPU hardware for it, then rather than the above, look for the parameter "AllowSharpen=1" Change that to "AllowSharpen=0" and see if you like the results. If you have antialiasing turned on AllowSharpen re-sharpens the image which, as a side effect, makes the shadow dots more pronounced.
Cheers