I recently reinstalled Fallout 3 since I got a new computer and I wanted to see how it handled everything at max settings. The answer is beautifully, except in one area: the water ripples look terrible:

http://img717.imageshack.us/i/fallout3201103101149574.jpg/
http://img840.imageshack.us/i/fallout3201103101149439.jpg/
http://img825.imageshack.us/i/fallout3201103101149226.jpg/

There's this strange tiling/pixelation effect on the ripples and I have no idea where it's coming from. I have nothing forced in my GPU's settings, it's all application-controlled. Plus, all the settings for the water are maxed, both in the launcher and in the .ini file. I've noticed a similar issue with water next to shores and tree canopy shadows in Oblivion, so I'm wondering if they might be related. My specs:

Core 2 Q6600 at 3.0 GHz
GTX 260
4GB RAM

Water settings from INI and preferences file:

INI:

[Water]bUseWaterShader=1bUseWaterReflections=1bUseWaterRefractions=1bUseWaterDepth=1bUseWaterHiRes=1bUseWaterDisplacements=1bUseWaterLOD=1bReflectExplosions=0bAutoWaterSilhouetteReflections=1bForceHighDetailReflections=0bForceLowDetailReflections=0fTileTextureDivisor=4.7500fSurfaceTileSize=2048.0000fNearWaterOutdoorTolerance=1024.0000fNearWaterIndoorTolerance=512.0000fNearWaterUnderwaterVolume=0.9000fNearWaterUnderwaterFreq=0.3000uNearWaterPoints=8uNearWaterRadius=1000uSurfaceFPS=12

FalloutPrefs:

[Water]bUseWaterRefractions=1bUseWaterReflections=1bForceHighDetailReflections=1bAutoWaterSilhouetteReflections=0bUseWaterDepth=1bUseWaterDisplacements=1iWaterReflectWidth=1024iWaterReflectHeight=1024bUseWaterReflectionBlur=1iWaterBlurAmount=4

Please help!

Bumping. Has nobody else ever encountered this?

Issue solved. Ambient Occlusion was turned on in my card's settings. Switching it off cleared this stuff right up.