Display issues after installing Mavericks

Have an iMac mid 2007 and installed Mavericks. However am noticing areas on the screen where there are moving diagonal lines (the best way I can describe it) and also on certain background colours like light grey there is a horizontal pin stripping effect.

I have reinstalled a clean copy of Mavericks twice and also reinstalled a clean copy of Mountain Lion to check for this issue but no sign of it in Mountain Lion at all.

Have been on to AppleCare and they have had me reset the SMC and PRAM and also repair permissions and repair disk as general troubleshooting but the problem still persists. They have said to try downloading the installer again for Mavericks, which I am currently doing, incase there is something wrong the first copy although installed and works fine on my MacBook.

Just wondered if anyone else had had this issue either using an iMac Mid 2007 with the ATI Radeon HD 2600 Pro 256mb or later model?

I am wondering if it may be something to do with the driver included with Mavericks for my graphics card?

Thanks for any help anyone can give.