The only way I could get AA to work is with nhancer forced AA compatibility mode Gamebryo.

So first I tried with forced x4 MSAA (tried with transparency ss/ms also but it is the same regardless) and this is what it looked like: http://img69.imageshack.us/img69/7862/divinity220091119204712.png
Pretty bad right? It looks better without AA because of this problem.

So now I try combined AA 8xS (even tried just super sampling 1x2 and 2x2 but with same results) and I get this:
http://img109.imageshack.us/img109/3246/divinity220091119200719.png
http://img10.imageshack.us/img10/8135/divinity220091119213117.png
http://img695.imageshack.us/img695/2650/divinity220091119213123.png
http://img695.imageshack.us/img695/9731/divinity220091119213136.png

Here are my nhancer settings: http://img693.imageshack.us/img693/9616/nhancersettings.png

Any ideas?

Specs: intel core 2 quad q6600 (2.4ghz) 5gb ram
evga nvidia 8800gt 512mb - 191.07 drivers
physx drivers 9.09.30
windows 7 ultimate 64bit