When the display drivers are stuck in the infinite loop, there has been an error in the communication between the video card and the AGP controller.
In most cases this problem can be solved by installing the drivers for the AGP controller that were provided by the operating system. This can be done through Device Manager.
ATi distributes an application called VPU Recover, which will reset the GPU when the infinite loop occurs. But considering that you have an nVidia based card, I would recommend taking a look at this