This is no solution just a simpathetic ear.
I had a similar problem when re-installing a G-force 2 GPU. I'd "upgraded" to a FX5200, mistake, frame rate just half. On re-installing the sea (water) in LOMAC flickering black and grey flashes. Yet when previously installed worked perfectly. All other flight sim programs worked perfectly. Eventually found I had not installed the driver update correctly and card was still using the boxed driver. Updated driver fixed the problem. I'm about the update my computer which includes two 6800GT cards in SLI. Your problem is making me nervous, particularly as you seem to be far more computer literate than me.
I assume your problem is with FC1.1 and LOMAC. If or if not, have you tried posting at other forums? eg Frugals, Unbisoft, etc.
All the best, I will monitor your progress. If it helps, thanks to the help of forums and the contributors out there, I have been able to solve ALL of my computer/game problems and ther's been a few. Keep posting.
Wombat1940