Graphic Problem.

Hello i have some weird graphic problem and i wonder if you guys could help me out.
So i have to mention that Before installing my video card driver everything works fine.
After i install the video driver here it is how my desktop looks like.
http://img69.imageshack.us/img69/9928/17945449.jpg
The weird thing is that when the Windows is Loading everything looks fine..The problems appear after the welcome logo.
http://img684.imageshack.us/img684/5620/72847840.jpg
If i turn the Hardware Acceleration to None everything looks and moves like how it should be, but i can`t play games (Wow for example gives me this error "Failed to find a suitable display device. Exiting Program. )

My PC Specs:
Amd Athlon 64 Proccesor 3200+ 2.00 Ghz
1GB Ram
Video Card : Ati Sapphire x1650 512mb

Things i have tried
Reinstalled my windows
Reinstalled the video drivers countless times
Dust cleaning, Unpluging and pluging back all my PC pieces

Driver installed currently :10-02_legacy_xp32-64_dd_ccc

Any help will be appreciated.Thanx

Are those black pixels on your first image just artifacts from uploading or are they there at all times?

Nope they are here at all times..
Here is a picture of how it looks in game..
http://img543.imageshack.us/img543/5207/48418237.jpg

That's the highest level of artifacting I've ever seen. x.x (artifacts = usually permanent damage on GPU)

Better start to save up and get a new PC. ><

Ugh..i tought so too.
It may be the Video Card..sigh...

It is only the GPU, but it's of little sense to add a new GPU on that PC.
Even the weakest GPU you can put on it will be bottlenecked by your RAM and CPU. ><

So i guess i can`t avoid buying a new PC..
Thank you for your help much appreciated :)

Pretty much. You'll be happy once you feel what your new PC can handle.