Go to display property, settings, advanced, adapter, and make it to default(60hz) instead of optimal see how that works. If that works, then redfine your monitor and videocard interms of resolution and color depth, under display property. However, since you said pixels I think may be it is the resolution. If it is less the icons of the desktop screen will be pixelated.
I think the card and your mobo is fine, the card works both AGP 2x and 4x. Your mobo is one of the newest BX mobo (and it supports AGP2x) made in last year only about 1 year old so it shouldn't be the problem with your AGP slot and forget about the AGP1x don't worry about that part at all.