For weeks now I was frustrated at the texture issue I was getting in game and after reading so many threads in different forums and trying to change all settings possible in all combinations it ended up not being this at all.
I finally decided to take a look at the BIOS setting on my motherboard. Now I have not touched my BIOS on the motherboard ever so it was default basically. I found an AGP arpeture setting which went from 64MB to 512MB. Not being 100% sure if this was supposed to match my video card memory or not I decided to change it to 128mb which is what my video card has.
Well the transformation is unbelieveable. I do not get the texture issue any longer. It was persistant before the change and after playing for around 6 hrs it has not appeared at all and boy the game is so nice now.
Anyway I recommend that anyone with AGP and texture issues look at this setting in your BIOS.