Should I have time before someonelse finds an answer I'll try to.
For the moment, it's not possible to decide wether it's hardware/software, because:
-If it's hardware, it can be a sub component, that derails only under some function calls.
-If it's software, it derails only under some function calls... too.
is the video car replacable in that mac and is there a mac with same video card around to swap?
What were the last soft installed? could it be related?
I'd search for CheckBoard image video problem in Google, not mentionning the mac at first, as it might be a common nvidia problem (I think macs are mostly nvidia)
Edit: After searching for 10 minutes, seems like a soldering/heat problem. Could be more of a hardware
problem. But Some threads in vista forums report same behavior, others when trying to connect TV out.
I don't know how proficient you are in computers, but installing a small livecd linux distro, a mediacenter one to be sure you get video, could be a way of knowing wether it's software or not.
I still do not know what kind of mac it is, but even with a livecd, I would disconnect any harddrive just to be sure there's no data corruption occuring.
I would also think of making a whole backup before anything else, because after all this might be a dying comp and your boss probably values data even more than the hardware.