Well, you shouldn't buy the 8800 GTs with the standard single-slot cooling system. During the holidays it was madness here in Romania, you couldn't find ONE 8800GT in stock. The only ones available were Palit standard-frequency 8800GT. After a lot of thinking I bought one and I can say I am super happy. It has a double-slot cooling system, HUGE cooler over the chipset and a HUGE radiator over the VRAM. Even this way, it's super silent. The case fan runs louder.
I recommend you buy 2x
8800GT Palit Sonic(factory overclocked). Nice, sturdy and quiet cooling system plus amazing performance. One Sonic GT beats a stock GTX, no questions asked(I mean this from a price point of view). Imagine two...
The resolution wasn't the reason your video card malfunctioned. If you would of used 1280x1024 it would still of malfunctioned. It was doomed from the beggining. Maybe it was OCed too much? Use 1600x1200.
As for the PSU. I reccomend you get a 650W power supply unit. If you think it's to expensive, I recommend an expanding PSU.
This should do the trick.
I hope I helped you.