I posted a similar query - I'm getting exactly the same problem - and also have an ATI card. Torso and legs are the wrong colour and some outfits are screwy, particularly feet alphas. I've cleared the folders without any improvement.
I've tried changing in different arqeas with no improvement. Once my AVs appearance is corrupt changing skins doesn't help - they all look bad. If I change skins on one of the few good outfits then everything looks bad again.
For a few days now some of my outfits appear corrupted (though not all). There are two main effects: 1. Skins appear to have a semi transparent jacket on the torso and semi transparent trousers on - this effect remains if I change to any skin. Even when all clothes and attachments are removed the torso and legs look off [though my face always looks ok] 2. Footwear alphas don't appear to be applied. A handful of outfits do look ok but if I edit or change any aspect then the skin and feet gliches appear. Help!!! Is this a server problem? I've tried every graphics test suggested to fix textures etc but to no avail.