Yes, an IRQ thing. I bet it works if PnP OS is set to No but Assign IRQ is set to Yes as well -- try it that way once.
When Assign IRQ to VGA is set to no, then the BIOS won't, well, assign an IRQ. It assumes that the OS can handle that, by either assigning its own IRQ, or by not using IRQs (or something). In Windows this works OK (not great, but OK). However, in Linux, that kind of thing doesn't work -- the idea is, why add code to the kernel to assign IRQs, when the BIOS can do it just fine? So no one adds that code. nVidia can't do it, because they'd need to change more of the kernel than just adding a single module can change.
So if assign IRQ is set to no, then the video card never gets an IRQ in Linux. Ever. Which causes the nvidia.o kernel module to not be able to find the video card. Which makes it not load. Which gives you that error about can't initialize kernel module.
Does that make any sense?
One other thing: AGP is just PCI. There's no real
difference. AGP is a sub-bus (in PCI device identification terms, it's bus 1, where onboard stuff -- IDE, etc. -- is on bus 0, and addon cards are on bus 2) of your PCI bus.