I run a XFX 7600GT (the factory overclock) and I use the NGO optimized drivers (1.16369). I have an AMD64 3000 and 2 gigs of ram...My operating system is XP Home, and (finally)...the only flashing that I notice is the reflection of mountains in the water (from a distance)...

I used to get a (weird) shimmering in the reflections of the sun in the ocean, but that disappeared a few "NGO" drivers ago...actually the water (ocean/sea) has never looked better on my system (OpenGL, perfect, water-3)

The MOST annoying problem I was having with the water (for a loooong time) was the elusive black circle that was hiding beneath my fighter...I could always see it at the edge of my "POV" peripheral vision, but whenever I tried to get a good look at it, it disappeared (poof!). But like the shimmering "NGO" sorted it out...(actually the circle was what introduced me to the "NGO optimsed" drivers...before them I had the problem)

Now my only problem is the disappearing reflection of the mountain... :)

My box:
Q6600; Asus P4k-C;
2GB corsair dominator @1066Mhz;
segate baracuda 32MB cache 750GB hd
Western Digital 32Mb cach 500gb hd
Audigy2 ZX
EvGA 8800GTS 512MB (g92)
XFX 8800GT 512MB
Samsung 226BW LCD panel.

running at 1680x1050x32; 8Q aa; 16 aniso filters, water=4, maxed out in all game setings.

The only issues i found are the anoying texture flickering, exactly like in the screens and vid above.
I ran the game with latest official nvidia drivers plus beta ( 28 ) drivers on both cards. Same flickering with both 8800GT and 8800GTS 512 cards.

NGO have some really good driver-tweaks for gamers.

Did you install the drivers in performance or compatibility mode?

Just tested the NGO 1.16369 with compatibility-installation.

The texture-flickering is slightly reduced, but it is definitely still there. :(