Not sure if this is the right place for this thread - I apologize in advance if I put it in the wrong spot.

I have been playing around with the raw settings for my d80 for a few months now. If I shoot at low iso's (200 and under) I don't seem to have this problem. But anything over about 400 iso gives me hell. I'm sure there is a term for this, but I'm not sure what it is, so I will do my best to explain it. If I process a raw image in PS, even with the noise reduction and sharpening all the way down, I get all these tiny little line-type marks all over the image which makes it look just terrible. It is worse in the shadow areas/more noticeable. It makes sharpening basically impossible and even selective blurring doesn't really get rid of it. I'm pretty sure this is a problem with what I am doing with the raw file because I dont notice it on the jpg if I save one. It is getting really annoying because I feel like I would rather shoot jpg these days at higher iso's, but feel I wont get as much out of the file (duh). Can someone tell me what I'm doing wrong?

It makes sharpening basically impossible and even selective blurring doesn't really get rid of it.

To a certain extent, the D200 has this too, starting from raw. You won't get rid of it by blurring or noise reduction since you'll get infamous blobs. Try this: in the raw developer, the "shadows" are set by default to 5%, at least in mine. What happens is that the left side of the histogram is cut off, making all near-blacks totally black. Slide that to 0% and don't do any autolevel or autocontrast in PS since it gives the same. There are better ways to enhance vibrance, like unsharp mask.

Instead of blur or noise reduction, paint over the noisy area with a slightly lighter tone, sampled from the vicinity, soft brush, 20%. The blobs and squares will disappear but original sharpness stays.
For blue skies: getting rid of the blobs is very difficult unless you gaussian blur them 30px and up, but then you will get banding. Just do that in a separate layer and mix it 30-60% with the original: blobs gone and no visible banding.

The in cam noise reduction on jpegs is pretty good and natural. Consider this: shoot raw and jpeg finest and largest resolution both. Superimpose both in PS, top layer = raw result, and selectively erase the problem areas so the jpeg layer shines thru.