The image file is fine. For instance I open an image through photoshop and everything is fine until I use a certain tool, that's when the lines apear. Or when I am using Safari, and the page loads fine, then I scroll down and the lines apear on the whole window. I rebooted my imac recently hoping to get rid of the problem. But it's still there. Didn't have photoshop issues before, but I upgraded after the reboot.
I would say that you shouldn't use that tool!
Which tool is that?
What version of Photoshop?
Have you checked that your Photoshop has all updates?
What version of OS X? Is your OS X fully updated?
Does your Console show any system.log messages when that video anomaly appears?
My first thought when odd things happen, and might be system-wide in OS X - is to try reinstalling your current OS X combined updater.
It's not just with the one tool, it's with a lot of them, LOL. The problem is not with photoshop, as the lines apear when using safari and calculator and several others. My OS X is fully updated and just this past weekend I rebooted the whole system. Everything is fresh. I believe the problem begins when I update to leopard. I even shelled out the $30 to upgrade to the snow leopard after I rebooted, in hopes of fixing it but if anything it's worse. This issue is annoying enough for me to sell my imac.
"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"