The first ~2 months the iSight iMac was first produced, it used a G5 processor and different logic board.  These are physically distinguished from intel iSight imacs by the presence of a mini-vga port on the back instead of a mini-DVI port, and that when booted into FW target mode, you see an orange FW symbol on blue background, instead of a dark grey FW symbol on a light grey background. (in addition to the processor description on the foot)

Approximately 15% of these machines we have seen for service have been experiencing video display problems.  These problems do NOT show up on Apple hardware test as VRAM issues, though they visually suggest a VRAM problem.  They do show up on external displays as well as on the internal LCD.

Common symptoms include a fine checkerboard corruption on the display or a vertical/horizontal shifting pattern, that affects the entire screen.  The issue can be persistent, or very intermittent.  We've seen machines run fine for 2 days straight only to suddenly act up.  They often work fine for days after a part is replaced, and then once returned the customer, are back a few days later with the same issue reoccurring.

We have been unsuccessful at all attempts to repair this problem, typically being advised by Apple to replace the LCD panel, the LVDS cable, logic board, or power supply.  Apple techs will never give up on repairing a computer, and this is no exception.  They will insist on us repeatedly replacing the same parts over and over again until either the tech gives up or the customer gets pissed and calls Apple and demands a new computer.  Considering Apple's new service metrics, attempting to service even one such machine is disastrous to the repair center's service excellence scores.  Our first such machine we replaced the logic board twice, power supply once, LVDS cable twice, and LCD panel three times, based on tech chat recommendations.  Fortunately this was prior to service metrics.

After two such experiences, we took the third one we encountered (our demo) to a nearby (50 mile) Apple store for them to repair.  After two weeks of trying to repair it, (and we shutter to think of how many parts) they replaced it with a new (refurbished) unit.

We now advise all customers with this condition to take their computer directly to the nearest Apple store because we cannot repair it, and if we attempt to, it will only result in a long delay before they inevitably get a replacement machine from Apple.  All customers we have advised to do this have received replacement computers or discounts on new machines at the Apple store. (none were successfully repaired)

This is a somewhat delicate problem for us, because Apple requires us to accept any machine brought in for service, but since we can't just replace their computer or give them $500 off a new machine, it's really our only option.