Questions for ya...what temps are you getting? What OC's are you pushing? What is your fan speed at? Driver version?
I would get blackscreen if I OC'd too far and the driver would reset or bsod, which the vista driver for some reason would bsod. Adding 1.18v to my old GTX260 would only create more heat, seemed my GPU was hitting an OC wall of sorts that quite a few others have it too. I've seen some attain 800/1600 GPU/Shaders on 260's with the voltage mod in bios, but I dunno if they were water-cooled or what...and that seems more rare than anything.
I can attest that EVGA FTW clocks was just about right for a great mixture of performance, stability, and temps for gaming purposes. Everything ran great on my 22" LCD at 1680x1050.
1.18v for GTX260's has still yet to be proven to help many for higher overclocks, as temp does become a stability issue it seems and shader stability at higher clocks with higher temps seems to be a culprit. I read this in the GTX280 hard v-mod link that I posted in the OP. It could be overcurrent protection, not entirely sure there...but I have yet to see any stock GTX260 bios (not including 216p) that had higher than 1.12v for the GPU Extra setting, no matter the clocks. I'm fairly confident the 216p still uses 1.12v, and will only be able to truly verify that when mine shows up, plus I will of course see how it OC's, and see how it reacts to 1.18v...I'm expecting similar results to what I've already experienced.
I would say in your case, flash back to 1.12v or increase fan speed to 100%.
What kind of clocks are you trying to bench at on 1.18v? Keep the info flowing in, this is a great place to post your results, good, bad, indifferent, stable, unstable, etc!