Is the GPU the GeForce4 420 Go? This is a bit of shot in the dark, but back when I had my 12" over time I began to get artefacts on screen that are very similar to what you're getting, when doing something even 'relatively' intense (iTunes visualiser, Top Sites etc.), this got worse as time went on & I ended up coming to the conclusion that it's the GPU. It seemed I wasn't alone either as a few other people posted similar experiences with that card.