Samsung SyncMaster 793MG, an CRT monitor, native resolution "1024 x 768".
I tried change to an old CPU with Radeon 9200, and same monitor. No such problem.
It works well days ago, I guess not the monitor problem, and I never touch display setting, just daily surfing & gaming.
If I was in your position I would say the same thing, it's just that a reformat gives you almost an error free factory new version of XP without any registry errors or anything else. I'm looking at your screenshot and and I'm wondering what'll happen if you up the res to like 1280x1024, otherwise a problem like the weird pixels is either because the OS is buggy or the GPU is faulty and needs to be replaced.
If just browsing internet or doing similar things except gaming (2D mode only), increase idle clock speeds of the gfx card, i.e. core clock to 300MHz and memory clock to 400 MHz. If just gaming (3D mode only) decrease max clock speeds by 50 MHz and try.