Yes, I realize I should have posted this AFTER I installed SP2 and DirectX if I still had the issue, but I was on extremely limited time and left my computer idle to install SP2.
Anyway, I have fixed the issue. In case anyone else has the problem, I will tell them how.
On the default drivers for windows, it does nothing but do its job - make your screen display unshitty. Your graphics card drivers from the distributor excels at this job, making everyday visual tasks possible, from things as simple as having smooth scrolling to things as complex as three dimensional games. People with older operating systems but newer graphics cards will experience problems such as mine. Windows XP SP1, designed many years before the Nvidia GeForce FX 5600 Ultra came out along with the drivers which are updated constantly, could not necessarily "support" the new drivers. The result? Windows resorts to the crappy graphics to help it keep going. Updating to Windows XP SP2, a more up to date and much more supported operating system distribution than SP1, automatically fixed this compatibility with the drivers and the operating system. This goes to show - Always keep your system up to date.