This looks similar to that "Error 134" stuff that was going down on patch day. I had issues with shadow effect even after I fixed the error so I ended up turning those down as far as they would go. No idea if it's related or not, but it's pretty close.. if you haven't done
this already then give it a shot and follow all the steps exactly. Only other thing it might be I suppose is if you're running an older video card, with the patch Blizz dropped support for some of the older cards.