Since the May update, I too have been seeing these artifacts and flashing lights in my game, and sometimes have to shutdown and start back up to get rid of them.

Sometimes it's a jagged thing, like for example the empty space behind Ploh Trishbak (entrance to castle adoulin), sometimes turns into a brown jagged wall instead of open space and a fence.

And sometimes I see these multi colored lights that sit in place when I'm not moving, but flash different colors when I move my character.

I'm using an Nvida GeForce 8600GT and I thought it was my video card dying or something until I saw your post about it too. :P