Enable PhysX? on a single GTX260? There are 2 levels of PhysX settings, Medium and High, each would butcher the performance of high end single cards. Unless you slide in a dedicated PhysX card, it's hard to get respectable frame rates along with maxing this game out.
I have turned OFF PhysX, AA and AO. Even with AO enabled, the frame rates are pretty consistent. AA butchers my performance and I didn't dare try turning ON PhysX. The physics effects are excellent even without PhysX being turned on. So just enjoy the demo.