Do you have a .xsession file in your home directory? (ls -a should show it if it exists)
If so, post the contents. If not, look for an Xsession file (no preceding dot, and capitalized X) somewhere under /etc/X11, and if you can find it, post it.
My guess is that you're using either xdm or kdm or gdm (which are display managers, they find out who's logging in and are supposed to choose an appropriate window manager or desktop environment based on that), and for some reason, it's always defaulting to twm rather than whatever you pick.
I don't use any of them ([xkg]dm, that is), so I'm not sure on how to fix it, but checking into .xsession and Xsession files are (IIRC) a good way to start. If you can't figure it out, I'm pretty sure there's someone on www.linuxnewbie.org
who knows. In any case, I am fairly sure it's not an nVidia driver problem, just something with the way XFree86 4.2 installs by default.