Pixelation/reflection/texture issue under water

[mans1ay3r]

Whenever I am above water, and looking down at an object/npc that is underwater, it has pixelated jagged edges. This never happened until I installed Breezes FO3 Males. So I uninstalled it, still happening. I disabled all my mods, still happens. I had a backup Data folder from a month ago, tried that, still happens.I've tried to search here and elsewhere to see if anyone has had this problem, and couldn't find anything. Here are some snapshots:

 

http://img149.imageshack.us/img149/2874/fo3pixelreflection.png

 

In the picture above, the NPC on the left is fully submerged, the one on the right has his head above water. You can see how they have pixelated jagged edges. But the head of the right NPC is completely fine because it isn't underwater. You can also see on the right NPC's legs how the skin texture is cut off within the pixelated mass. (see video below) :-s

http://img707.imageshack.us/img707/7942/fo3underwater.png

Now I am underwater and as you can see, no issues.

 

As I was taking the snapshots and writing this, I realized its not just the edges. It's not easy to explain so I had to make a quick youtube video:

Watch it in full screen HD to really see what's going on.

 

10 seconds in, you can see when I start swimming and causing water ripples, the pixelated bodies are stagnant in the water (as they should be) while the skin texture of the NPCs are rippling WITHIN the body. wth?

 

Any tips on what I can do to fix this?

 

• I was in point lookout in the snapshots/video but this happens every where.
  
• I even reverted to a very old save, still happens. I tried playing around with the options in the Launcher, specifically under water settings, I saw changes to other things but nothing to fix the issue.
  
• I have NVIDIA GeForce GT 130M but prior to this issue, I hadn't touch its settings nor option settings in the launcher.