E8400 vcore issue

I've noticed that when I set the vcore on my E8400 to a certain setting such as 1.22500v, my computer says it's running at a lower vcore such as 1.8v. Is this normal? I've been getting a BSOD citing nvlddmkm.sys during gaming (and sometimes during start up or shut down) and I was wondering if my vcore issue could be the problem. I've also noticed that if I set the vcore to auto it reads out at about 1.06v which seems incredibly low to me. I'm pretty sure there's no issue with the PSU since it's done the exact same thing on two different units.

My system is:

Intel E8400 @ 3.0ghz
ASUS P5N-D nForce 750i SLi
Zotac 8800gt 512mb
4gb Patriot Extreme Performance 800mhz RAM
320gb hard drive
Antec Earthwatts 650w PSU
Raidmax Smilodon case
Windows Vista x64

Guessing that you meant something other than 1.8v...

CPU vcore drops when it's under load, which is known as vdroop. Raise your vcore a little but keep an eye on the temps. Run something like Prime95 to stress your cores while monitoring the temps with Real Temp. Rinse and repeat until you're stable and acceptably cool.

If you're not overclocking, just use the Auto setting in the BIOS. It's not as efficient but at least it'll work.

"I've been getting a BSOD citing nvlddmkm.sys during gaming"

I've had to deal with this error on my dad's PC running Vista as well. It happened to me during video editing. I can't remember exactly every detail, but it had to do with some conflict between the nvidia drivers and Vista. I solved things using Driver Cleaner.