Velvet Assassin Windows, X360 game

In recent versions of PhysX Nvidia changed architecture, removed a lot of old engine versions, moved files from Ageia to Nvidia folder, so this causes issues in many old Physx powered games (mostly 2005-2009 years).

This site Physxinfo.com explains the difference between new and old architecture if you want to get why this happens and how physX drivers\api libraries works.

Latest version that had old engines included was this Nvidia.com
its still considered latest official, newer versions comes with beta drivers and it seems like old engines was removed to reduce driver size.

So instead of just replacing newer version of physX by older, i managed to fix problem smarter:
1) Uninstall currently installed PhysX if its version anything above 9.12.0613 (at the date of this post 9.12.1031 is latest version wtih reduced number of engine libraries)
2) Download PhysX 9.12.0613 Nvidia.com
3) Install it.
4) Go to
%ProgramFiles%\AGEIA Technologies
or
%ProgramFiles%\NVIDIA Corporation\PhysX\Engine
copy all folder somewhere safe for while.
4) Uninstall PhysX 9.12.0613
5) Now take your saved folders with vX.X.X engines and put the exactly where you get them from (if folder deleted, create one or few with same names and hierarchy)
%ProgramFiles%\NVIDIA Corporation\PhysX\Engine
6) No install your latest version of physX (9.12.1031 at the moment)it will not remove folders that not included in installer.
7) Enjoy old games (including Velvet Assassin) and recent PhysX fixes for newer games.

P.S. - if you are familiar with MSI editing tools, you can add missing engine folders to it directly.