I have a HIS 4870 1 Gb card and I have been having some problems with it. This card seems to run every game pretty well, but once pixel shader 3 is involved there are problems. I recently picked up the game Darkfall and if I play it with pixel shader 3 EVERYTHING is messed up. Once I drop it down to pixed shader 2 everything is fine, but everything looks like 1990's graphics. I have the latest drivers to my knowledge and I've tried to fiddle with the settings in the CCC to no avail. Any help would be GREATLY appreciated!
I had the opposite problem with Oblivion. It was caused by the Asus programs that came with the card making the game detect my GPU wrong. It then selected the wrong shader package, which then game me a nice grey screen (though I could walk around and do stuff, just not see. Once I removed the Asus programs and reinstalled drivers, everything worked. I'm not sure if my scenario is in any way related to yours, but you could try reinstalling the drivers and the game or try older drivers (maybe 9.3) and see what happens.
Wow, that certainly is odd. Try the other suggestions first, but if Euphoria_MK's suggestions don't work and using driver cleaner to remove the drivers (then reinstall them, of course, and maybe reinstall the game as well) it may be best to try reinstalling windows. You could also try 3DMark 06 (the free version) as that does a Shader 2.0 test and a Shader 3.0 test and see if it glitches in that too.
You might just need to do a full reinstall of windows. Something certainly seems messed up software wise. Before that though, you could try redownloading and installing Directx 9 and see if that helps. Also, you could post your dxdiag which could say something useful.
I just ran driver cleaner again and it has seem to fixed it!
But for some reason when I reinstalled the new drivers I don't have access to the CCC and it says in device manager that my driver version is 8.600.0.0 when it should be 9.4. Either way, the weird graphic thing has stopped, which is good.