I've seen this image a bunch as well, and was almost sure it was from a game/demo I remembered on the Commodore64. I saw the comments in this thread saying it was from "Sieze the Day", so I spent a few minutes trying to find the Commodore64 demo I remembered from my childhood (because I thought it had the most amazing graphics at the time).

Anyways, after 5 minutes of searching, I found this:

http://www.youtube.com/watch?v=sZ7UDnJF3kk (Jim Sachs Time Crystal demo)

Funny how warped my memory of this is. Still an awesome demo for it's time. I always wanted that to be a real game...