I have been complaining about the block display in Skyrim in my previous post. This always happened with WinXP and not with Win7. To switch OSes for one game seemed unjustifiable, so I decided to look into this issue.
The real reason why the blocky display is happening is because the video driver is not able to generate ambient lighting effects in the game. I noticed this because the blocky display would be either around sources of light in the game (such as fires), or in the open (when the sun is shining). The driver was working fine when it came to rendering textures on objects … but how to render ambient light?
Fortunately, Nvidia had come out with a video driver update just for Skyrim. This is the 285.58 driver version, and it addresses this ambient lighting issues. So no more blocky displays in the game!