Try different graphical settings, I had the same effects happen to me in ArmA (although I suspect heating was a key factor also) I changed the graphical settings lower and voila ArmA ran great.
Looks to me like you fried your vid card too. Those dots are a sign. I had this happen to me when playing OFP long ago.
It's probably too late. Try taking the card out and opening the heatsink up (don't pull it off) and clean out the inside of dust and hair that gets trapped in there.
Oh. Turn on the setting in the control panel (nvida's) to allow the temperature control to warn you when the GPU gets too hot too.
I have the same problem (although no weird dots) with my GF7950GT 512MB - it is not overclocked and not overheating. I'm thinking the card could just be screwed - gonna try take it in for a replacement.
I have the same problem with an ATI Radeon X1600XT 256Mb DDR3. Its like the texture are projecting to the infinite, creating a plain. In the first game or second this dont happen, but when do ALT-TAB and ALT-TAB again to return to the game, its all good again. Dont know why this happen, but this as already happen in ArmA and in other games, drivers are good dont know why this happen... some graphicals bug from ATI i think.