I believe I am having the same issue that this fellow (or lass!) is having. The below URL should direct you to a screenshot with the wonky text.
http://www.pleadingbrilliance.com/storage/WTF.jpg
I have done some fairly extensive searching on the topic, and have yet to find any answer. I have tried changing the gameplay resolution and, as Microsoft suggests on their Known Issues page for the game, I have turned anti-ailiasing off.
The text in Fable has never shown up correctly for me. Subtitles and tutorials are usually garbled in the fashion depicted in the screenshot.
Unfortunately, I am not proficient enough with my computer's hardware to know where to look to find information on my graphics card. If it's of any help, my computer is a brand new Dell XPS 400.
If anybody here could give me some suggestions, I would be most gleeful! It would be nice to have a better idea of what I'm supposed to do with certain items in the game and whatnot!
Thank you,
- Arch