Solved.I am so happy to post the fix to this. Took me two weeks to fix this and i finally got it.
Directx 8 does NOT support some water particles and flame particles in some games (Gmod) . To fix this problem you need to download the latest directX from the website.
http://www.microsoft.com/downloads/en/resultsForProduct.aspx?displaylang=en&productID=9C954C37-1ED1-4846-8A7D-85FC422D1388Go to your steam.
Go to your game list.
Find Garrysmod.
Rightclick > Properties > General Tab > Set launch options > Insert the text (-dxlevel 90)
Start your game and your good (:
A few of your video settings will change, nothing serious though.
Requesting a lock.