Tried another monitor/cable?
Got on board graphics card you can try too? (A vga port near your usb/ethernet ports on the back)
Sounds like your graphics drivers are massively corrupted.
Try this: http://www.guru3d.com/category/driversweeper/
If not reinstall Windows. Your graphics card is fine, I'm 99% sure it's software tbh.
Have you tired uninstalling the drivers and getting new versions from nvidia?
Win 7 64Bit here: http://www.nvidia.co.uk/object/win7-winvista-64bit-280.26-whql-driver-uk.html
Win 7 32Bit (lol) here: http://www.nvidia.co.uk/object/win7-winvista-32bit-280.26-whql-driver-uk.html
Why not get a live Linux cd to boot from. Ubuntu or something will do. If colours are still knackered then defo hardware.
Yep. Knew it was a driver error. Shame on the people suggesting it was hardware, you can tell it isn't hardware. Firstly because there wasn't any graphical artefacts on the screen, secondly because the OP suggested the mouse went slowly when the PC was under load. Meaning that Windows wasn't using the 2D acceleration on the card to provide the image, it was trying to do it using the generic way through software.
You're all n00bs.
Unplugged the hard drive and used another hard drive(that shouldnt make a difference should it?), yes formatted it first and then installed vista to it and then downloaded the latest drive from nvidias website, then checked on device manager which also said latest drivers are installed.
Should i still try windows 7?
I thought the lines down the display picture were artefacts, however it is too uniform. Never seen it do lines like that when set to 16 colours. Still though windows should still load a default simple driver that can display true colour at lower resolutions upon initial install.
Have you gone into the Nvidia control panel and tried to force it to use 32bit colour?
I'd uninstall all the drivers you have put on and let windows find one itself. Could also Google for modified inf drivers for NVIDIA and go for one of those instead . Usually better tested than the official ones
Have you tried pulling the card out, blowing down the socket, then properly re-seating it? I'm pretty certain this isn't a hardware issue since you said Ubuntu worked fine.