Very weird graphical corruption

[prannock]

Problem is with Ep 1.
While its not "fatal" to the gameplay, they are quite distracting and i'd love to get rid of them.

In a nutshell, the white coated standard zombies have black squares on them in a chessboard pattern. Also sometimes they have silvery bluish surface.
The "Zombines" (that joke of Alyx' for some reason really cracked me up), combine soldier zombies, do not have this problem.
Also the chessboard squares pattern appears on some buildings as well.
To best illustrate the problems I have attached 5 screens.
Another problem you will notice if you look closely at a light blue water patch on Screen3. (in upper left corner)
It's thin horizontal stripes running all across the game view. They are not so visible on dark colours, but they run uniformly across all screen.
I dont have this problem in any other game.

My system:
Athlon64 3000
1024 ram (400mhz)
Nvidia 6200 256 mb
SB Audigy 2 zs sound

I have upgraded to the latest nVidia drivers (84.21), no change.
I am attaching DirectX Diag info.

 

[prannock]

And this is the 5th screenshot.
(I've cropped them to fit within HLnet's 100 kb attachment limit)

 

[Dekstar]

Verify your GCF files. Go to Steam -> Games -> [Right click]Half-life 2: Episode 1 -> Properties -> Local Files -> Verify Integrity of Game Cache

That should download any missing files (Like the textures/shaders which give you the checkerboard effect).