Some colored squares show up from time to time. They go away them come back. They are paterned, evenly spaced. All different colors.

Like Beige_00 said, sometimes you gotta bite the bullet. Bring it to the Apple store, most likely a hardware failure.

I know this is a LONG time later, but I am now having the problem described in the OP, I can't really find any pattern to this. I have seen the squares at their worst when previewing a movie, but also in just about every other application. I can usually get them to appear by using google chrome, but they will appear even when nothing is running.

I was wondering what the solution turned out to be?

I do not have apple-care, but I tried upgrading from snow leopard to mtn lion, and the problem remains. I also tried removing a .plist for desktop settings, but I don't think it even did what the article was saying it would do (this was after the upgrade to mtn lion). Maybe the problem was between the seat and keyboard?

Thanks for the quick response!

Not that I wanted to hear this at all..... applecare ran out last year at this time....

Well, we'll see what we can do. I figured it was hardware, seems it does it OS wide anyway.

Thanks again!

Just so everyone who reads this sees, the video card replacement also fixed mine.

I Have this issue, too!

On a 2009, 27 inch iMac.

But it only shows up during boot up and only for a couple seconds.

My iMac is fine otherwise.

This issue hasn't shown up while working on my iMac or when playing video content.

I hope this stays that way.