This grid pattern is perfectly normal. It will only appear when using the Y800 codec in iCap. NexImage 5 uses a color sensor and the Y800 codec is for capturing uncompressed AVI files in grayscale.
The grid pattern is created by the codec from the color pixels of the camera’s Bayer matrix when they are converted to black-and-white. The Bayer matrix (or Bayer pattern) is the microscopic arrangement of color filters in front of the pixels on the imaging sensor. The array is made up of 50% green pixels, 25% red pixels and 25% blue pixels laid out in a specific pattern as seen in the image below:
Y800 is the only codec that will show this since it is the only uncompressed grayscale format option for this camera.
In the black and white image created by the codec the green pixels appear as the brighter squares, whereas the blue and red pixels are the dark squares. They do not show color, because the Y800 codec is grayscale only.