Here is what I did. First, restoring from a point before SP1 did not do any good. Lots of strange things going on. All Quake based games started flickering (showing desktop in mid game).
So, I did a fresh re-install, then installed SP1. Next was the latest VIA chipset drivers (if it applies to you) and then sound card drivers - finally, the beta 40.xx drivers off the Nvidia site. So far, so good. All quake based games running great. After 1 week of gaming, no problem with any other game that I can see.