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Sounds a lot like the old HydraVision problem:
Have you tried trashing the prefs yet? Anything out-of-the-ordinary about your monitor setup?
As a start, try to reduce the resolution set in the graphics card's options. This is even more advisable for a dual screen display - you may simply be pushing one level to high. If you use asymmetrical dual screens, try to match the resolution of both monitors. Having one small screen next to a big one can have some odd side effects, especially with the accelerated drawing function of some Adobe programs. Beyond that you need to provide some more detailed info to get us started...
Thanks a lot for the quick replies.
I don't remember which DBoxes don't show up in AI, but in AE, I restarted while pressing Cntl+Shift+Alt to trash the prefs and it fixed the problem - but I lost all my output module presets :( (yes, I know I should'be backed 'em up).
This problem did show up after I totally uninstalled by video drivers.
I assume the same solution will work in AI...