It's possible the card is damaged, but I think unlikely. I would bet the problem is on Verizon's end. "they can't get their system to accept the new data id" sounds fishy to me.
Try following this guidance from TiVoMargret. Be sure to get tech support (not just the first person who answers the phone) and use the words "manually validate." Sometimes you get better results using online chat (I have had good luck this way). Again, the magic words are "manually validate."
If you have the correct part number, but your HBO or other premium channels are still "pixelating" then it is likely that your CableCARD is "authorized" but not "paired". Call Verizon's activation line 1-888-897-7499 and keep asking for "tech support". Once you have reached someone in tech support, tell them your CableCARD is authorized but not paired, and ask them to "Manually Validate Set Top Box". (I have been told this instruction is what has worked for other customers.)