I have experienced this also, going to video options and then back to the main game results in the full screen becoming blurred, like there's an error with the post-processing.
I am getting this exact issue also.
Intel Q9550 @ 2.83Ghz (Stock)
8GB DDR2-800 4-4-4-12
Asus P5Q-E
ATI Radeon 4870 1GB
Asus Xonar D2X
Windows 7 RC1 64-bit
Setting VRAM to 'Very High' does not fix the issue. The -winxp switch works however.