When you play the game the speed "sticks" at a certain point in each gear, making automatic transmission unplayable. However if you try the cheat high-power cars then both automatic and manual will work perfectly and the cars are easier to drive so you can beat Lakeside!
Of course the AI cars being stuck helps to make the game easier too!
To access the high-power car mode, on the car selection screen hold VR4 button (define in the emulator controls) and shift gears 1,2,3,4. It should make a "whoosh" sound.
Note: the missing mountain in the desert stage (all black) seems to happen more with the non-high power Lancia. I have never seen the backdrop in the Mountain stage appear (shows black).
N.B. using Nvidia card