You were correct Wim!! I changed to OpenGL and the problem was gone, I have CCC AA set to environment rather than Application controlled for games such as SH3, I will change this back then try again Trainz with DirectX!
Hope there is an improvement because the new card still jerks around, maybe one of the following problems:
1) Upgrade from Win XP 32bit to Win 7 64 bit and up the ram to 8Gb
2) Upgrade the CPU from dual core Phenom II to 4 core!