IMac 24' starts up with Pixelated screen and hangs.

Lately ive been facing problems with my iMac (2009 early model, 3.06 Ghz Intel Core 2 Duo, 4Gb DDR3 RAM). Mostly its during start up. iMac has pixelated screen and the loading wheel also hangs and sometimes the screen also starts blinking. I need to long hold the startup button at the back to reboot, which sometimes works in one reboot and sometimes it takes 3,4 or may be more. Also after starting up, the pop up shows, that computer was not shut down properly. After starting up, iMac has started freexing and pixels start appearing and screen freezes (scheck creenshot below), but I've noticed that even after freezing, I've had the internet on my phone working perfectly fine, which runs via the iMac's wifi sharing.
Can someone please help me solve this issue. The motherboard has been recently replaced due to other problems i was having. What could be causing the start problems ? IS my hard drive crashing or what?
Plese help.

That looks more like a problem with the GPU. You should run the Apple Hardware Test http://support.apple.com/kb/PH11342

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