Native resolution pixelated

[splicer_dicer]

This is actually an update of the problem I'm experiencing.
Having received an original copy of the first Bioshock from a friend, and experiencing the same choppy graphics I'm now in a dazzle as what the hell is causing it on both titles.

Screenshot 1
Screenshot 2
Screenshot 3

Tried reverting to a year old graphics driver, 2 years old, and the latest one.
Disabled/enabled every option in nvidia control panel (GeForce 8600gts).
Disabled dx9 3d acceleration, no impact.

Weird thing about Bioshock 1 is that in-game the graphics are just fine, while in Bio 2 the problem affects in-game as severely as it does the menu. It's as if something mis-interprets the resolution.


Windows XP 64 SP1
Latest C++ '05 Redist from Microsoft
Latest graphics driver
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nVidia GeForce 8600gts (512MB model)
2x2GB DDR2 OCZ @1066MHz
Intel Core2 @1.87GHz
integrated soundchip / Realtek HD Audio