I have actually just started having the same graphics glitch myself. although the timing is different. my game is fine up until i enter into any battle and then at random it will have the aforementioned graphical malfunction followed by a complete lockup.
I checked the hardware for overheat and functionality, i checked the OS and ran it on vista 64 as well as xp sp2, i checked drivers, the install and direct x. none of it made a difference.
however while i was troubleshooting i checked the patch vers. and noticed that i wasnt having this problem until "steam" auto updated my game with vers. 1.7. the timing and freezes match up perfectly and prior to that patch the game worked perfectly, and we arnt the only ones reporting this problem.
if your a steam user i hoped this helped. if not then please let me know so we can keep looking for things to fix
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