Same here if I have 16 bit on. Go to 32bit and everything blends and it's beautiful. You lose that "sheeting" appearance. I have a Diamond Viper V770 TNT2 Ultra, 32mb btw.
I'm away till Sunday night but I've used the same drivers since I bought the card last November, I'd switched from the Diamond drivers that came on the CDRom, didn't notice any difference so I just left them ion place. I think they are the Nvidia reference drivers. The older ones. I'll check when I get home and post the version and even email them to you if you end up wanting them. Unless by then you end up resolving this anyway.
-Westy