What is wrong with my iMac? (video corruption, unstable) I have a 24" Early 2009 iMac.

During "intensive" use (such as Photoshop, WebGL, etc.), the system starts to become very unstable, resulting in bizarre graphics corruption and other weird behaviour. Ultimately, the machine freezes or crashes.

Somehow I managed to take a screenshot just before it went down, and I was surprised that it captured the carnage. I've censored (blurred out) some names to protect the innocent, but all the other glitches are part of the corruption.

I ran a temperature monitor in the background during use, and although it increased (as expected), it didn't seem to show unusually high readings for any components. 

Anyone have any idea what could be wrong? Should I try reinstalling OS X from scratch, or is this definitely a hardware issue? 



Setup:


2.93 Ghz Intel Core 2 Duo
4GB RAM
GeForce GT 120 256 MB
OS X 10.8 (upgraded from Leopard, then Snow Leopard)


EDIT:

Having said that the components' temperatures seemed well behaved, I have started to notice that the problem occurs more readily when my room is warmer. Wondering if it is a heat-related problem... 

EDIT 2:

Reinstalled OS X from scratch, but problem persists. I think this indicates a hardware problem. Sadface. Will open it carefully, hoping I'll find a busted fan or something silly like that. Otherwise, will take it to the shop - not keen to mess about with hardware even though it's out of warranty as the machine is still worth a fair bit I'd say.
Backup first! Copy all your essential files, and make a Time Machine backup if possible.

It can be about software or hardware, it's hard to say.

I would first recommend creating a new user account and try there.

Then, reset NVRAM and SMC and try if that help.

The last good solution is Safe Mode and cleaning cache with apps like CCleaner or CleanMyMac.

The bad solution is just installing Mountain Lion on the same partition without cleaning your old system. If that doesn't work, upgrade to Mavericks and try. If that still doesn't work, you might need to do a clean install.

[EDIT: You can also just install to an external drive.]

Please remember to backup your Mountain Lion installation app if possible, or you might need to find is somewhere else later.

If all those above doesn't work, you might have to send it in for repair.

EDIT: Try BootCamp and run a benchmarking tool which pushes your CPU and/or GPU to the limit. That will show if it's a hardware problem.

UPDATE: Check out this Apple Discussion Thread, there's apparently people having problem like yours.

There's also a guide to testing your memory, something you can do if you want to.