GeForce 6800 XT failure

[Dieselbrad]

Also, 2D may never see issues (desktop) while your 3D functions will.
This is normal for hardware failures as well.

First thing is first: Do you have issues in other 3D games?

If yes it may be hardware.. if no it is likely software, Half-Life 2 was developed mainly for the ATI hardware so, don't expect the Nvidia drivers to play nicely. As Joe suggessted a driver Rollback is often needed for Nvidia & ATI alike.

Valve likely has a recommended driver version, I would stick with that and also remember that the Loast Coast isn't a fully function game, but just a showcase of the features of "Source". So I wouldn't worry to much about it

I beat the Loast Coast in about 6min.. Episode One in about 3.5 hours.

You aren't missing too much.