Strange graphics card problems

Guys,

Well, for the first time I'm actually stumped with an issue that I can't seem to resolve myself!

I recently had the XFX 8800GTX in my system die, and I was able to 'bake' the card back to life (as some might be familiar with this stunt). I nevertheless ordered a XFX GTX 275 that was nicely within my budget. I also upgraded my system with another 2GB of DDR2-800 (was on sale as well).

Here are my specs:

Intel C2D E6850
4GB (4x1GB) of Corsair DDR2-800DHX (running at the rated 4-4-4-12@2.1v)
Gigabyte GA-P35-DS3R
OCZ GXS700 PSU (700w)
4 SATA-II Seagate HD's (2x250 & 2x320)
1 SATA DVD-ROM drive
Creative XF-I Fatal1ity
WinXP-32 on HD #1
Win7-64 on HD #2

My PSU states that it has 4x+12v outputs at 18A each. I'm not sure if the unit advertises itself as being a multi-rail PSU or not.

Now, I'm well aware that my mobo is not a PCI-E v2.0 motherboard - I was told that the GTX series would run fine on v1.1 mobos like mine...

As soon as I started using the new video card, I noticed some strange problems: I am a sim-racing lover, and I usually spend most of my time playing GTR Evolution these days. I set the sim up to recognize my new video hardware, and away I went.

Less than 60-seconds into playing the game, the game freezes up, and even locks the game up to any keyboard input as well (for a short time). When the game does recover, the textures used in the game are plastered all over improper 3D models than what they should!

I ran a synthetic benchmark on the machine last night in XP, and when it got to the 'full screen' GPU tests, it crashed the main nVidia driver DLL (I had just re-installed XP that afternoon, and re-installed GTR-E with just the defaults, no add-ons).

In Windows-7, I was playing around with SimBin's free 'Volvo' game, and was treated to the exact same results. The lock-ups were a lot more forgiving, and I saw a 'Low Video Memory' warning flash across the screen at one point...

I'm using the latest 185.85 drivers, and was surprised that in the previous XP install that games like UT3 did not make the card exhibit such behavior, and that 3DMark Vantage completed all tests successfully in Win7 at my monitor's native resolution (1680x1050).

Is my PSU not up to the challenge for the new card & RAM? Can anyone here point me to a more definitive location to start looking for the cure (being that it did this on a 4-hour old brand-new XP install, I'm sure this is hardware related)?

Thanks in advance, guys!

OK, I'll give them a try and let you guys know...

What about running with only two sticks of RAM?

Ahh well, s**t happens.