I had this happen with a clients laptop Dell Latitude D620. I noticed the lcd panel right side mount was "wiggly" and discovered a screw was missing. I hypothesized a cable going to the lcd was getting pinched.
I connected an external monitor to it, and pressed the blue function key and F8 numerous times to see if a video signal would appear on the remote monitor. Eventually it did, but it looked even worse than your image. I pressed Alt + F4 to try to exit out of windows (assuming it was at the xp login screen, and the screen image changed to horizontol gray and black blocks, and I could see garbled text at the bottom of the screen, counting up from 50. I let it finish counting to 100 and the system rebooted and the lcd screen on the laptop (not external) came back and showed bios booting (never saw bios before).
I tightened the screws best I could (1 was still missing) and told the client to buy a new laptop, he didn't need the screen dying on him in the middle of a presentation, and I would use this sketchy laptop as leg warmer on cold nights during raid rebuilds :)