So as I reported before Christmas Dell eventually sent a technician out to fix my problem by replacing the motherboard and the NVIDIA 8400GM discrete graphics adapter.
This replacement fixed the problem that I was having perfectly. The machine no longer tanks when playing Direct X games and I've played all of the various engines that trigger my issues for a couple of hours each now so I'm definitely convinced that the problem is resolved. Specifically Unreal Tournament 3, Half Life 2 Source Engine games (Portal, TF2, HL2) are all fine and 3dMark 2003 now completes.
I was initially impressed that Vista(32) accepted the motherboard change without a hitch but it became apparent shortly afterwards that there was a very serious and fundamental problem with the OS even though there were no errors being reported. After the hardware swap I was unable to access certain system components - the Control Panel and most of its subsidiary parts (like the Display Properties dialog). I was able to access the NVIDIA screen properties dialog, the Device Manager and the Windows Event Viewer (which reported no relevant errors even though there clearly were things going badly wrong, go figure) but not Windows Update or the Add\Remove Programs dialogs. Some digging led me to this post on the NVIDIA support forums which helps resolves problems with the Software Licensing subsystem after hardware upgrades. This made some sort of sense given the hardware change and WGA's problems with that and there clearly were problems with the two Software Licensing services on the machine. I was unable to get them both running correctly so I eventually decided that I had to reinstall Vista again. I had already prepared for this before Dell arrived and had everything either running from portable storage or backed up so the decision was pretty easy.
The reinstall allowed me to completely remove the multiple backup\restore\media partitions that Dell chooses to install that I have no use for. I had also messed up the partitioning a bit early on when I'd installed Ubuntu 7.10 and allowed it to do its own thing on the drive. Fixing this was a bit of a pain as Vista's installer had lots of problems removing some of the partitions, in the end I had to restart the install about 5 times to get it to a point where I had a completely empty drive that Vista's installer was able to recognise and after that there were no particular issues with the install. Thankfully I'd kept a copy of all of the latest Dell drivers and application updates that I'd downloaded so reinstalling them was pretty painless.
I then hit Windows Update immediately to let it do it's thing and it went merrily about its job until it ran into this problem with KB929777 failing to install with error code 8000FFFF. The recommended manual uninstall and manual install worked but I was surprised that a general release hot-fix would be that poorly behaved.
Once I'd reinstalled all Windows Update encouraged me to update the NVIDIA drivers to v156.69 from the Dell supplied version 156.55. That resulted in Portal (based on HL2's Source engine) failing to launch but had no impact on anything else so I downgraded back to the Dell drivers.
Finally I went to restore my data. Now I generally keep all of my data in a "portable" directory rather than use the default Windows data structures but this time I'd opted to use the default document folders for some stuff and I used the native Vista Backup to back this stuff up. Silly me. Now I didn't lose any data in the end which is something to be grateful for but Vista's native Backup application is abysmal, take my advice and don't ever use it. I've reverted to keeping my data in a folder structure that I understand and can backup with a single Robocopy. I think I'll be keeping things that way for good.
It's turned out fine for me in the end but I can't help thinking that this has taken far too much effort to resolve.