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Do you still have warranty? Maybe the GPU is shot. Can you do a Clean Install of Snow Leopard or Erase and Install of Leopard?
And what exact MB model do you have?
Yes i guess i can do a clean re-install of the system but i hope i can just fix it as it is. instead of having to do a full data backup, formatting, re-install, update etc..
You can try reinstalling the OS. It may be that your video driver is corrupt. Safe mode boots with generic video drivers that may not be activating circuits in your card. Certainly worth a try to reinstall.
I have had the same problem. I researched it and then put the OX installation disk in and held the D key down on start up to do a Hardware test. Hold it down till the blue screen appears and do a full test takes about an hour. My macbook came up with an error code and when I put this error code in Google this link came up: