I am not an expert, but I know a little about video cards because I love gaming. I would try to use resolution 800X600, and then set refresh rate at lowest setting, be sure to click on the option that reads, "Hide modes that this monitor can not display." If that does not work, try setting at each refresh rate to see if it will fix the problem.
Does this happen in safe mode? Do you have another monitor to try and see if it does it on both monitors?

THIS IS A HARDWARE FAILURE!

this happened to me very recently with my geforce 7800 gt.

i'm sorry to say no drivers will help as this is a hardware problem!!!

you will need to send the item back to who ever you bought it from and have it repaired or better replaced, and do it ASAP! as it will just get worse!

trust me if you leave it too long it will start to happen when you try to boot up and prevent you from booting up at all.

i ended up buying a new card to keep me going while i wait for mine to be sorted (mine is outside the 1 year suppliers warrenty) i'm still waiting to hear from the manufacturer!!!

dont leave it, get it sorted!!!

hope this helps