Mine does this too, I am completely fed and watered and show no signs of sickness so there should be no reason for it to be blurry (I think). I have the same graphics card as you but run Win7 64bit.

Not only does it do the blurry thing on logging into a server, sometimes it will do a full on graphics glitch (I've provided screenshots of this but not the blurryness) which will only go away once I've gone to the video settings.

I also had this happen just before, I re-logged and noticed I didnt have the option to open any doors. I server hopped a bit and still no dice so I tried killing off my character and starting fresh and still not working. Now that ive exited the game im gonna restart it and try again.

Yeah ive found I can drink from most ponds, but there have been approx. 2 that I can select drink water for but nothing happens.

yeah can be very annoying when looting in major town area ..