Thanks, Fred1723, for your story, and I'm glad this thread has helped make your computer useful again! It's been a life-saver (well, actually machine-saver) for me, too. I applied KrzysiuTurek's "kext fix" over two years ago and it definitely fixed the frustrating "screen freeze" problems I was having every day. Luckily I came upon this thread before I replaced any hardware.
hardtofin, I'm sorry to say that I've been following this thread for over two years and cannot remember anyone posting a reference to a similar fix for NVIDIA cards. I don't know why that's the case, but there you have it.
For reference, I've got an iMac8,1 which is a 24" Early 2008 Core 2 Duo 2.8 GHz with ATI Radeon HD 2600 Pro (256 MB), purchased in May 2008.
Still, something about this kext fix is odd, though. First, my symptoms didn't appear until some relase after 10.6.3 (I think it may have been 10.6.7). Second, at its worst, I got about one screen freeze a day (much less than some others here). Third, 28 days ago I upgraded my OS to 10.8.4 (later to 10.8.5), did not install the kext fix, and have had no problems. Others' postings above seem pretty convincing that 10.8.5 does need the kext fix, and I wonder why mine seems to be working without it now. I'm quite sure that I had the same symptoms as others here, and that the kext fix did resolve the problem -- so what's going on now with my machine?
Also, I (too quickly) read a posting on another site (I think it may have been MacRumors' forums) that claimed that there were three versions or revisions of the ATI Radeon HD 2600 Pro card used in these iMacs:
1) exibited frequent freezes in 10.6.3 and above
2) had less frequent freezes, only in 10.6.7 (I think he/she said) and above
3) one with no problems
This hypothesis could explain my experience and how it differs from many others'. I will try to re-find the thread and post a link, but does anyone have any other info on this idea? If there were truely multiple revisions, would we be able to find a revision number on the physical graphics card board? Has anyone really looked closely at one? (I know that when I had my iMac open for a HDD/SDD upgrade, the graphics card was the last thing I was worried about!)
System Information-->Graphics shows a Revision ID, but AFAIK everyone's is always 0x0000, so this argues against the idea. But still possibly there were different revisions of the hardware that (for some reason) don't show up in System Information.
(I used "kextstat | grep ATI" to ensure the old ATI kexts were not being used. I get only one ATI kext loaded now: com.apple.ATIRadeonX2000 (8.1.6) and the date on the file is May 7, too new to be the 10.6.2 version.)