1. Heat can be a cause of it, but generally when it's heat related that's when lines start forming and your card is pretty much dying lol. You can still get artifacts even if your card never went above 20C at full load, this is because like a CPU, it can't do the instructions properly when it's pushed too far beyond it's limits and of course in most cases a volt mod will fix this of course, because again like a CPU....more voltage = higher OC's. MSI will be coming out with a 6600GT infact where they will be including software to bump up the GPU voltage and memory voltage, very awesome idea if you ask me, I wish all cards had that instead of resorting to a voltage mod.
2. I guess it's your call for the fan. Traditionally it's intake, but if you have your fans all setup different, it wouldn't hurt as exhaust either, so that way the air isn't going over your hot HD's and putting that into the system. Instead of normal front as intake and rear as exhaust it might actually be more beneficial to have the rear as intake and front as exhaust so the CPU gets the freshest air first.