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It could be one of several things, but from what it sounds like, you probably have a/some burned capacitors on your video card. The card itself still works 'technically', but with capacitors being fried, it would cause distortion like you describe.
For a new card, if you have the money to spend, a GeForce 6800 Ultra is the ownage right now. But if you are going for a good card for a lower price, try an ATI Radeon 9600XT or something, those are pretty good.
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