http://imageshack.us/photo/my-images/811/screenshot2tt.jpg/

Everyone else having this same problem?

After that I have to restart my computer, as those squares follow me around if I don't.
Nothing seems to be overheating, and everything works fine as long as I dont play Skyrim.

My graphics card is ATI Radeon HD4890 1GB.

I had a similar problem with my nvidia setup. I turned everything in the nvidia control panel to application controlled and it worked out.
Radeon is notorious for driver issues, id check for an update

I've already installed latest drivers.

bump

Check your temperatures on the GPU to make sure it is not overheating.

http://gpuz.techpowerup.com/11/11/11/9ud.png

It seems ok to me.

But is that while playing the game? I notice the GPU load is 0%?

That indeed is while playing the game.

Just to be sure: so you alt-tab out of the game (and you have the monitor program running) and this is then the read out?

That's right.

OK - please post you Dxdiag report. Need some more details in order to help.

http://gpuz.techpowerup.com/11/11/11/84r.png

Seems that the GPU-Z is a bit slow to update.

If you still need that dxdiag, just tell me.

I am not sure if this is the problem, but your GPU memory is almost 100^o, which could actually result in what you are seeing.

If you are able, try to take of the side of′your case to get as much air into the interior of the PC as possible.

It's off. I even have a tablefan (whatever they are called) blowing in some extra air. Seriously.

What you need to do is manually adjust the fan speed on your GPU. I have a Radeon 4870x2 (single-fan variant) which has CTD (not in skyrim) when it reached 110C. The problem was the automatic fan settings only engaged the fan above 50% when the GPU reached 95C or so. This happened too late and the GPU overheated. If you manually set the fan to 65-75% static it will keep the GPU cooler. Also since the fan's speed is a constant it will less noticeable over time.

To manually set the fan speeds, load CCC. Go to the Performance tab and then Graphics Overdrive. Enable AMD Overdrive if not already. At the bottom there is an option called Enable Manual Fan Control. I would set it to 70% or more. This should reduce the GPU's temperature by up to 20C.

Won't allow editing. Here is after 7 minutes in-game.
http://imageshack.us/f/52/skyrimgputemp1.png/

Hard to see but its 77.5 maximum GPU memory temp. Everest was showing about 85C though.

Enabled Overdrive, but still showing about 100. Not crashing tho..

Would underclocking help at all?