Drwho8 - I am running on a Duemilanove also.
I agree with Condemmed, try removing (or increasing) the 75Ohm resistor. There are a couple of versions of the 3 resistor D2A converter around, you might try a different one.
I guess the fact that you are getting some grey and colors indicates you are in the ballpark for voltage levels. Unlike XSmurf who isnt really getting anything. Yours sounds more like timing problems.
If you load the stripped down Pong example from the DailyDuino link I gave earlier I can tell you where you can tweak the timing. I couldnt tell which code you had downloaded earlier. Basicly there are a couple of dummy instructions at the end of line , the "PORTB=PORTB" statement. Add or remove these ONE AT A TIME.
The vertical refresh is set by the "FrequencyTimer2Init", but I think it is as close to the correct value as the hardware will support. You can change the vertical refresh by changing the timer2 value. NOTE - the timer2 code rounds your selected time to a value the timer can actually do. You can ask for a more accureate 58.x hz time, but the timer probably will round it for you...
Condemmed -
I think it would be possible to make the vertical more accurate by halting the timer for a couple of NOP instructions then restarting it each frame. (possible, not easy..)