If I recall, that is a laptop card. And if I also recall correctly, the latest driver from NVIDIA is 179.48, released on February 11, 2009. All of Rare's testing and changes were performed on a desktop computer. Also stated is that this patch wasn't going to nuke all issues. Some needed actual programming in the source code to fix.
Sometimes upgrading or downgrading drivers might be problematic, as sometimes residual driver files could exist, and old stuff + new stuff = weird stuff. Easiest thing to do, is to purge the drivers completely from the system to make sure what you install, is the the only one there.
I can provide the steps, but I'm not responsible etc etc etc
1) Download the latest driver (http://www.nvidia.com/object/geforce_notebook_winvista_179.48_beta.html)
2) Download Driver Sweeper (http://downloads.guru3d.com/Guru3D---Driver-Sweeper-(no-installer)_d1672.html)
3) Uninstall the old driver via control panel.
4) Reboot into safe mode
5) Run driver sweeper, select NVIDIA-DISPLAY, and hit Clean
6) Reboot into windows. Cancel out New Hardware Device windows.
7) Install Drivers
You might also want to modify your MxO shortcut, to "Disable Desktop Composition". This turns off Aero temporarily, as this had some possible random issues according to WinterMute I believe.