"I rebooted the whole system"...
That can mean a variety of different tasks.
Do you mean that you erased the hard drive, and reinstalled OS X, and restored all your files and apps? Or, do you mean that you simply restarted your Mac? Or something else?
If you meant to say something else (like a reinstall without erasing), then that would make a lot of difference in the expected result.
If you get those lines in lots of apps, and you have seen the same with two versions of OS X (I'm guessing that you were using Leopard, and now you have Snow Leopard, correct?)
Then, I have to suspect that you have a flaky system mod of some kind, like Application Enhancer - or, perhaps a hardware problem with your graphics chip.
Run your Hardware Test, which you can boot to that test by restarting with a Command-D (for Diagnostics
) That command may not work if the hard drive has ever been completely erased, or if the original hard drive has been replaced. In that case, you can boot to your original DVD, which should have hardware test listed on the label. Again, you boot with that DVD in the drive, while holding Command-D.
Be sure to also try reseating your RAM memory in the slots.
Exactly which iMac do you have?
You can look in your System Profiler, and then tell us what is listed in the General tab/System Identifier. It will be in a format such as "iMac9,2"