Windows freezes in strange way

Heya guys.

So about a week ago I downloaded X3: Terran Conflict and in the intro, my computer froze. No alt+tab, no alt+F4, ctrl alt del, nothing at all. I had to hard reboot. Have tried again and again, and now, in several games, it's the same thing.

I'm not so addicted that I would post here for mere game issues. But now the computer freezes at random and it is causing me serious problems (as I am taking classes via the comp).

I did 17 passes of memtest-86 v3.5b and it didn't come up with any issues (though admittedly I can't find a logfile for it, any help with this would be appreciated.)

The freezing is strange. The screen freezes in place with whatever was on it at the time, and adds what seems to be random rectangles of different colors in random places. Sounds loop. Requires a hard reboot every time.

It seems to happen more readily when I do something that requires my video card to work. Videos, even YouTube... Games, flash stuff, and so on. Could this be a graphics card issue? It's an Nvidia 8800GT that's about 1.5 years old.

I've checked inside the case and cleared out the dust, made sure my side and back fans are working properly, lots of air flow. Updated graphics drivers, no success.

I was thinking, up until 10 minutes ago, that I may just be better off reinstalling windows XP to see what happens. But my fears of hardware issues became more of a reality when the computer did the exact same freeze during BIOS after my latest hard reboot, before XP even had a chance to start loading.

I've never updated BIOS and haven't the foggiest on how to go about it (I've been warned that much can go wrong so I've never had the nerve to do it) so that's one possible fix that I haven't tried. But I figured I'd consult the real geniuses before going about something that could be a bad thing.

*sigh* Thanks for your help in advance. I built this machine myself (my baby) and it's been working perfectly for almost 2 years, then suddenly, bananas! It's quite unnerving.

Elvaleryn

Edit:
Updated audio drivers/codecs, didn't help. Running games on lowest settings, hardly helped.
 
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Thought it may help to have a list of system specs. Here you go :)

Apevia X-Telstar Junior Type G
Gigabyte GA-MA78GM-S2H
AMD Phenom x4 9950 Black Edition
2X(Seagate Barracuda 7200.11 500 GB SATA-300)
Twintech GeForce 8800GT PCI-Express 2.0 x16
Kingston (4GB PC2-6400 CL5 240-Pin DIMM Kit, 2 pcs. 2x2GB 800MHz)
Antec Earthwatts 650 Watt ATX12V v2.2
 
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