[stepped diagonal band diagonally across the screen]

I have it too

Using ans MSI ( ati ) 5850 graphics card.
I see it only when enabling DOF

Its in the original sl viewer, but also in Phoenix Firefox and even Niran's Viewer...

 

Maybe its the OpenGL implementation from ATI / MSI

 

[how to fix nvidia's optimus to recognize second life]

I have an Asus N53S 6Gb / 1080 laptop with 540M and Phoenix failed to detect Nvidia GPU.

My solution: download 540M graphics driver and utilities from nvidia website.

http://www.nvidia.com/object/notebook-win7-winvista-64bit-280.26-whql-driver.html

Then change nvidia setting (control panel) from 'let program decide' to 'always use nvidia' or something like that. I changed nothing in the phoenix preferences.
All works like charm now, no problems anymore.

Hope this helps. Have fun.