gorbs - that's odd that the problem is limited to a precise situation: interacting with characters. That seems more like a driver issue to my untrained eye. The only thing going on when interacting with characters is the loading of the dialog menus.
To be clear: have you ever had the artifacting or shutdown problems at any other time?
If this is the case, it doesn't sound like a temperature bug (cold or hot) as those would happen at random times during the game.
Moving forward with one fix at a time makes sense to a certain degree, but I'd suggest that the 'baseline' for starting should be the latest versions of: XP/Vista (all current updates), DirectX, Game Patches, and GPU drivers.
If you have to call any tech support (like BFG) these are the first things they'll likely have you do.
Unless there is an important reason you know of not to update your drivers (or any of the other items), such as a known incompatibility between a game that you play and nVidia's current drivers, I'd always get the latest drivers installed first thing. Otherwise, if you're just implementing one fix at a time out of curiosity, I can understand that as well.
Cheers and have good weekend too!