UPDATE: Finally after hours of tweaking I've resolved this issue. Please pass it on to support groups.
In short, UPDATE 8800GT FIRMWARE BIOS one card installed at a time. The exe is quick.
In Detail, with only one video card in at a time, update the bios to the latest firmware update for the video card. Shutdown, remove card and insert other card and repeat.
It's a simple .exe from the video card manufacturer website (BFGtech.com in my situation).
I had trouble updating one card for unkown reasons it wouldn't update. After 11 repeated attempts using the firmware bios exe it accepted the bios update. Strange indeed, however it finally did work. It said something about unable to read memory xxx. (11 tries due to anger and coffee overload
I shut down the pc after removing the nvidia display drivers. I then inserted the 2nd card and attached all connectors and booted up. Windows installed standard nvidia drivers. I then downloaded and used latest BETA drivers 195.62 released this day. Enabled sli and voila, it stayed in 1920x1080p on my shiny new 58" panasonic viera plasma.
using DVI -> HDMI cable.
Note: i tried using hdtv component connector which came with the 8800gt but it didn't give me 1080p, only 1080i/720p. I didn't need it anyway.
I also tried using 195.62 drivers before doing the 8800gt card bios upgrade, but I still had same issue of video drivers corrupting and stuck at 800x600 resolution.
So it's the firmware that did the trick for me. Hopefully, everyone else has the same success as me.
Oh, the link for bios upgrade for my BFG 8800gt OC is: http://www.bfgtech.com//CMDocs/BFGTe...201F.00.18.zip
note: nvidia website will not have firmware update, so be sure to go to your card manufacturer website.