When you say you are running things at max settings do you mean that AA is turned all the way up or are you using a different form of AA such as FXAA? AA uses a bunch of GPU RAM (VRAM). It would make a huge difference.
Another thing to note is the amount of ram on your graphics card. Is it the 1GB version, or is it the 2GB version. I have a 1GB card and I can run games like crysis 2 at max or near max settings with mine at 1080p.
I am a bit surprised by your FPS drop in Diablo 3, it shouldn't be that hard on your card.
Well, your pc is spec'ed well enough, did you install the newest drivers? if so, try reinstalling. or you could just have gotten a slightly bad card, ive had bad cards before
It's probably software - bad cards tend to exhibit problems All the time - corruption on the desktop and in games, or crashing as soon as a level is loaded.
Hunting down offending software is a pain, though - I hate when something like this happens. DL GPU-Z or Afterburner so you can monitor your video card during games, CPU-Z so you can make sure your memory and CPU look good, and HW monitor to check for temperature/power issues. Task manager, too - CPU load and keep an eye on processes that consume a ton of memory/CPU time.
problem seems to be only when i engage in combat even on lowest settings
CPU hiccuping. Combat includes physics, AI, and ballistics that are all calculated by the CPU. Yours is not bad, but it's no i5...
If it's a small stutter, I'd say it's normal. If it's a huge one, or a ton of little ones during combat, I'd say you've got some other software sucking up some CPU time. You'll see the same type of thing on any system if you record video while playing a game.