a while ago someone posted this...
I have the EXACT same thing going on with my ATI radeon 9800pro256
I've figured out its a problem with direct3D, since I have the problem only with direct3D, directDraw works propperly.

-------
Name: Sheol
Date: August 07, 2005 at 11:49:41 Pacific
Subject: Direct3d Problem
OS: Windows XP Professional SP2
CPU/Ram: AMD Athlon XP 2400+ & 1.99 GHz 512 MB RAM
Comment:

I unfortunately don't know much about computers but what I do know is that my graphics card is a GeForce FX 5200, and I definitely have a problem with Direct3D. I ran the Direct3D test and the spinning cube was rendered with the same red/green lines as here: http://img150.imageshack.us/img150/8922/d27bx.jpg

It does this with all the full-screen games I try to run. I tried updating the drivers and I've done everything on every related Windows troubleshoot, but I still have this problem. I'm not exactly sure how it originally came about, but I think it started when my computer would randomly crash, and when I'd try to start it up again the monitor would not turn on, so I would have to shut off the power supply at the back of my computer, turn the monitor on and off, unplug it, etc. then try turning the computer on again until the monitor came on as well. And I believe this problem with Direct3D appeared after one of those crashes.

-----------------
fLoW