I'm thinking it's a hardware issue because I've had the same issue within another game. Unforunately they had no clue what was causing it, hopefully I can get help here.
I'm not exactly sure how to describe it, but it's like anything that includes movement skips/hiccups through their animations. From other people to texture movements will do this. The FPS stays at a normal speed when this is happening, and the computer experiences no slowdown. I haven't used SL for months, which in that time I had put together a new PC. I've tried with running absolutely nothing in the background, but no change. Any suggestions?
System Specs (All drivers up to date):
AMD Athlon 4400+ 64 x2
1.5GB RAM
Geforce 7800 GTX