PVP Client Scrunchy Grey Screen of Annoyance!

Going to try to explain this but have included a video that I think helps illustrate the point a bit better.

So I can log into the client fine but when I mouse over certain things like my friends list or the Play button the screen image scrunches up and turns grey. The links however do not move and scrunch up but remain in their usual place. So I have to hunt for the buttons in order to progress through my selections.

I have tried to uninstall and reinstall the game itself.

I have tried to make sure that my windows is update with all it's service pack things.

Also stuff like Flash, i tried to make sure that was updated as well. I tried messing around with the clients settings but haven't seen anything in there that would be related to scrunchy grey screen. Luckily the game itself does not have this problem. I just was hoping someone might have an idea of how to fix this annoying problem.

Much love and Thanks!