Hi James,
I too experienced your problem and I, like you, have a Gigabyte motherboard. Over and above everything you did, I went so far as to install and new hard drive and re-install Windows XP pro.
What I’ve found — and this may seem too, too simple to be real — is that if I let Vegas just “relax” for five minutes or so, things begin to work properly. Wierd I know. But it seems that Vegas and the OS and perhaps other background programs need some time to allocate resources. If I rush things, for example quickly going from preview window display to NTSC monitor display, the blocky images appear. Let things sit a bit, and NTSC display works fine. As for output to tape, I’ve never used the timeline, but rather the video capture program.
If during a long edit, the blocky or jerky display returns, I take it as signal to give Vegas a few minutes to itself.
I hope this absurdly simple “Go get a cup of coffee” workaround helps you as it did me.
Regards
Steve Best
sbest@stephenbest.ca