I belive we have found your problem then or part of it

4 is about the best I can go with the 7800 before quaility degrades. anything higher or lower starts it to shimmer or get grainy in appearance.
In the sim try various combinations of mip map values and bi and tri filtering, making notes of each combonation.
In your video card settings stick with your "quaility" settings for now while experimenting with different combinations.
If after testing some variations nothing improves it may be time to head into the FS9 config file.
Let me ask if you have any installed scenery, be it payware or freeware?
If not may I suggest you look into RealityPack 1.2 scenery enhancement (freeware) it adds much to the scenery and makes it more realistic. Can be found at Avsim (maybe even here? )
Not sure if this will help you at all but may offer some improvements.