IMac 24" boots only in Safe mode

iMac Intel 24" aluminum 3.06 processor, Graphics NVIDIA 8800 GS,from June 2008. Mac OS 10.6.7
It started a few days ago by flickering the upper part of the screen(horizontal strips) during normal use. After reboot the problem reappeared. Ata certain moment the computer would not restart, it hangs at gray screen, butthe hard drive turns and eventually other computers in a wireless networkrecognize the printer connected to the computer.
I tried all usual tricks (starting from DVD or external drive, safemode, single mode, resetting PRAM, unplugging the power cord etc.).
The computer starts only in safe mode, the gray screen becomes blue andthen normal desktop picture. Only some pictures and YouTube videos are not showing up. Safari works only with a single tab, however Firefox opens nearlyall pages.
I took the machine to an Apple shop for repairing. After 11 days theycalled me and said the video card is damaged and should be replaced (some $800). I do not have Applecare and I have to pay the costs. Before agreeing toreplace the video card I would like to know what is the origin of the problem
I wonder why the video card failed. Is it possible that another element(power supply or overheating) has caused the damage to the card? If the videocard is damaged why is it able to handle graphics when the computer is startingin safe mode?

Thank you very much.
In fact it is interesting to know if a video card can be partially dead. If it works (at least partially) at safe mode that means some components of the hardware are still alive. It seems that at starting in normal mode it tries to access something for activating the graphics and it cannot. Are there extra components activated at normal startup, which are not done at safe mode?
I unplugged the computer without holding the power button (At Apple store they didn’t tell me to hold the power button for 10 seconds after unplugging to reset SMC) - also Apple doesn’t suggest to hold the power button, see:
http://support.apple.com/kb/ht3964
I restarted the computer after resetting SMC and it started normally, but after nearly 24 hours the top of the display began to flicker followed by total freeze. After that it couldn't boot in normal mode. It hangs at startup with gray screen. Only in safe mode it can boot.

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      Bluetooth: Old - Handoff/Airdrop2 not supported
      Wireless:  en1: 802.11 a/b/g/n
    Video Information: ℹ️
      ATI Radeon HD 4850 - VRAM: 512 MB
      iMac 2560 x 1440
    System Software: ℹ️
      OS X 10.10.1 (14B25) - Uptime: 2:13:47
    Disk Information: ℹ️
      ST31000528ASQ disk0 : (1 TB)
      EFI (disk0s1) <not mounted> : 210 MB
      Macintosh HD (disk0s2) / : 999.35 GB (528.66 GB free)
      Recovery HD (disk0s3) <not mounted>  [Recovery]: 650 MB
      OPTIARC DVD RW AD-5680H 
    USB Information: ℹ️
      HP Officejet 6500 E709n
      Apple Internal Memory Card Reader
      Apple Inc. BRCM2046 Hub
      Apple Inc. Bluetooth USB Host Controller
      Alcor Micro Corp USB Card Reader
      Apple Computer, Inc. IR Receiver
      Apple Inc. Built-in iSight
    Firewire Information: ℹ️
      LaCie d2 DVDRW FW/USB 400mbit - 400mbit max
      LaCie d2 Quadra v3C 800mbit - 800mbit max
      EFI (disk1s1) <not mounted> : 210 MB
      Time Machine (disk1s2) /Volumes/Time Machine : 2.00 TB (251.43 GB free)
      LaCie d2 quadra (button) 800mbit - 800mbit max
      EFI (disk2s1) <not mounted> : 210 MB
      2T Photo's & Video (disk2s2) /Volumes/2T Photo's & Video : 2.00 TB (944.02 GB free)
    Gatekeeper: ℹ️
      Mac App Store and identified developers
    Kernel Extensions: ℹ️
      /Applications/Toast 10 Titanium/Toast Titanium.app
      [not loaded] com.roxio.BluRaySupport (1.1.6) [Support]
      /Library/Extensions
      [not loaded] com.microsoft.VirtualPC.Networking.1028 (7.0.3) [Support]
      [not loaded] com.microsoft.VirtualPC.Networking.1040 (7.0.3) [Support]
      [not loaded] com.microsoft.VirtualPC.OSServices (7.0.3) [Support]
      /System/Library/Extensions
      [not loaded] com.Belcarra.iokit.USBLAN_netpart (2.0.2) [Support]
      [not loaded] com.Belcarra.iokit.USBLAN_usbpart (2.0.2) [Support]
      [not loaded] com.Logitech.Control Center.HID Driver (2.6.0) [Support]
      [not loaded] com.RemoteControl.USBLAN.usbpart (2.0.6) [Support]
      [not loaded] com.aliph.driver.jstub (1.1.2) [Support]
      [not loaded] com.elgato.driver.DontMatchAfaTech (1.1) [Support]
      [not loaded] com.elgato.driver.DontMatchCinergy450 (1.1) [Support]
      [not loaded] com.elgato.driver.DontMatchCinergyXS (1.1) [Support]
      [not loaded] com.elgato.driver.DontMatchEmpia (1.1) [Support]
      [not loaded] com.elgato.driver.DontMatchVoyager (1.1) [Support]
      [not loaded] com.wacom.kext.wacomtablet (6.1.1) [Support]
      [not loaded] com.wdc.driver.1394HP (1.0.8) [Support]
      [not loaded] com.wdc.driver.USBHP (1.0.10) [Support]
      /System/Library/Extensions/Belcarra.USBLAN_netpart.kext/Contents/PlugIns
      [not loaded] com.belcarra.iokit.netpart.panther (1.6.1) [Support]
      /System/Library/Extensions/Belcarra.USBLAN_usbpart.kext/Contents/PlugIns
      [not loaded] com.belcarra.iokit.usbpart.panther (1.6.1) [Support]
      /System/Library/Extensions/RemoteControl.USBLAN_usbpart.kext/Contents/PlugIns
      [not loaded] com.RemoteControl.USBLAN.panther (1.6.1) [Support]
      /Users/[redacted]/Desktop Pictures/Icons/ /WD Firmware Updater v2.1.9.0.app
      [not loaded] com.wdc.driver.WdDeviceType00 (1.1) [Support]
      /Users/[redacted]/Library/Services/ToastIt.service/Contents/MacOS
      [not loaded] com.roxio.TDIXController (2.0) [Support]
    Launch Agents: ℹ️
      [invalid?] com.wacom.wacomtablet.plist [Support]
    Launch Daemons: ℹ️
      [loaded] com.adobe.fpsaud.plist [Support]
      [loaded] com.microsoft.office.licensing.helper.plist [Support]
    User Launch Agents: ℹ️
      [loaded] com.adobe.ARM.[...].plist [Support]
      [loaded] com.google.keystone.agent.plist [Support]
      [running] com.mlbam.nexdef.plist [Support]
      [running] com.netputing.airprintactivator.plist [Support]
      [invalid?] com.swarmcast.mlbnexdefautobahn.plist [Support]
    User Login Items: ℹ️
      SoundTouch music server Application (/Applications/SoundTouch/SoundTouch.app/Contents/MacOS/SoundTouchMusicServer/S oundTouch music server.app)
      EarthDesk Core Application (/Users/[redacted]/Library/PreferencePanes/EarthDesk.prefPane/Contents/Resource s/EarthDesk Core.app)
      EarthDesk Core Application (/Users/[redacted]/Library/PreferencePanes/EarthDesk.prefPane/Contents/Resource s/EarthDesk Core.app)
    Internet Plug-ins: ℹ️
      WacomNetscape: Version: 1.1.0-5 [Support]
      Default Browser: Version: 600 - SDK 10.10
      Flip4Mac WMV Plugin: Version: 2.4.2.4 [Support]
      WacomSafari: Version: 1.0.1 [Support]
      RealPlayer Plugin: Version: Unknown [Support]
      Silverlight: Version: 5.1.10411.0 - SDK 10.6 [Support]
      FlashPlayer-10.6: Version: 16.0.0.235 - SDK 10.6 [Support]
      Flash Player: Version: 16.0.0.235 - SDK 10.6 [Support]
      QuickTime Plugin: Version: 7.7.3
      iPhotoPhotocast: Version: 7.0 - SDK 10.8
      SharePointBrowserPlugin: Version: 14.4.3 - SDK 10.6 [Support]
      AdobePDFViewer: Version: 9.5.5 [Support]
      CouponPrinter-FireFox_v2: Version: Version 1.1.6
      GarminGpsControl: Version: 4.0.3.0 Release - SDK 10.6 [Support]
      JavaAppletPlugin: Version: 15.0.0 - SDK 10.10 Check version
    User internet Plug-ins: ℹ️
      WebEx: Version: 1.0 [Support]
      WebEx64: Version: 1.0 - SDK 10.5 [Support]
      Google Earth Web Plug-in: Version: 7.1 [Support]
    Safari Extensions: ℹ️
      Keeper - Password and Data Vault [Installed]
      Add To Amazon Wish List [Installed]
    3rd Party Preference Panes: ℹ️
      EarthDesk  [Support]
      Flash Player  [Support]
      Flip4Mac WMV  [Support]
      Logitech Control Center  [Support]
      MacFUSE  [Support]
      TiVo Desktop  [Support]
    Time Machine: ℹ️
      Skip System Files: NO
      Auto backup: YES
      Volumes being backed up:
      2T Photo's & Video: Disk size: 2.00 TB Disk used: 1.06 TB
      Macintosh HD: Disk size: 999.35 GB Disk used: 470.68 GB
      Destinations:
      Time Machine [Local]
      Total size: 2.00 TB
      Total number of backups: 68
      Oldest backup: 2014-03-22 15:08:16 +0000
      Last backup: 2014-12-28 16:37:12 +0000
      Size of backup disk: Too small
      Backup size 2.00 TB < (Disk used 1.53 TB X 3)
    Top Processes by CPU: ℹ️
          15% backupd
          8% com.apple.WebKit.Networking
          2% coreservicesd
          2% WindowServer
          1% AddressBookSourceSync
    Top Processes by Memory: ℹ️
      296 MB mds_stores
      296 MB Safari
      245 MB EarthDesk Core
      142 MB Mail
      90 MB WindowServer
    Virtual Memory Information: ℹ️
      3.99 GB Free RAM
      4.45 GB Active RAM
      3.37 GB Inactive RAM
      1.07 GB Wired RAM
      7.92 GB Page-ins
      2 MB Page-outs
    Diagnostics Information: ℹ️
      Dec 28, 2014, 01:48:01 PM /Library/Logs/DiagnosticReports/Aperture_2014-12-28-134801_[redacted].hang
      Dec 28, 2014, 12:30:56 PM Self test - passed
      Dec 27, 2014, 03:32:39 PM /Library/Logs/DiagnosticReports/backupd_2014-12-27-153239_[redacted].cpu_resour ce.diag [Details]
      Dec 27, 2014, 03:29:58 PM /Users/[redacted]/Library/Logs/DiagnosticReports/fontd_2014-12-27-152958_[redac ted].crash
      Dec 27, 2014, 03:29:55 PM /Users/[redacted]/Library/Logs/DiagnosticReports/fontd_2014-12-27-152955_[redac ted].crash
      Dec 27, 2014, 03:17:56 PM /Library/Logs/DiagnosticReports/Kernel_2014-12-27-151756_[redacted].panic [Details]
      Dec 26, 2014, 12:21:45 PM /Users/[redacted]/Library/Logs/DiagnosticReports/fontd_2014-12-26-122145_[redac ted].crash
      Dec 26, 2014, 12:21:43 PM /Users/[redacted]/Library/Logs/DiagnosticReports/fontd_2014-12-26-122143_[redac ted].crash

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