What motherboard revision is your DZ68ZV?
Your board probably has a BIOS that is currently incompatible with the Xeon E3-1220v2: http://www.intel.com/support/motherboards/desktop/sb/CS-033076.htm
Basically, to enable support for your Xeon E3-1220v2 you'll need a 2nd Gen Core series processor or a non-v2 Xeon to update the BIOS on your board.
My board is BQZV 14 0000 5C AA G4 1861-301
Also, I have just installed a new ATX12V 2.3 Antec Basiq 500W power supply in place of my old Linkworld LPG8-430W and now I do get something else.The board displays code 06 or 0b for fraction of a second then displays 1E for about 2 sec and goes into resets for 3 or 4 sec then starts again.
I do not have another processor to update the bios.
What are my options, can Intel take care of this for me. Let's say I send it over.
If this board is new, the BIOS is below the revision necessary to support the Xeon E3-1220v2, so I would say that this is more than likely the issue.
This QDMS document states that G41861-301 shipped with BIOS 1900: qdms.intel.com/dm/d.aspx/6938F273-DDC7-47DE-9C85-EE1239B01925/PCN111387-01.pdf (Page 3 states pre change and post change PBA #'s from where the BIOS revision for the DZ68ZV changed from 1900 to 2161)
BIOS 2161 is required for the E3-1220v2: http://processormatch.intel.com/CompDB/SearchResult.aspx?Boardname=dz68zv
You could also try a different video card since that seems to be the only variable left, as the E3-1220v2 has no integrated graphics controller.
If you cannot source a non-Ivy Bridge processor, you can always give Intel support a holler to see what they say.