My settings are highest possible for my card, since the old gal doesn't support the newer shaders.
Res is 1600X1200

I have a e6550 core 2 duo and my graphics card is a ATI 1950XT.
Both are overclocked with reliable settings, meaning they are tested with Prime and Furmark.

I've played all kinds of games though it seems like the ebb and flow of the waves in the spawning pool causes the graphics distortion i am seeing. Most of the pool is fine but when it comes to the little detail of the waves. The reason I think its the waves is that the distortion moves back and forth pretty reliably.

Kurz,

Unfortunately using Prime95 and Furmark to test your hardware doesn't necessarily mean that it is 100% stable. Those programs test only the specific components and don't stress the entire system like the game does.

Have you tried lowering the graphic settings or returning the overclocks to stock speeds?