Ubuntu 16.04.1 LTS is based on the 4.4 Kernel. As per this Q&A Ubuntu 16.04.3 LTS uses Kernel 4.10.
As of Kernel 4.6 a bug was introduced for the Nouveau driver that isn't in the nVidia driver.
I understand the bug has been fixed but not sure why it is affecting you. I would recommend getting the latest image for 16.04.3 and trying that. Alternatively you can try the steps outlines in the Q&A to install 16.04.1 and doing an HWE upgrade to 16.04.3.
An alternative is to install 16.04.1 and follow this: How do I update kernel to the latest mainline version?.
I had no problem booting the Live USB with Nouveau driver but have the GTX 970M laptop chip with 3 GB RAM. The bug in question was for the 4 GB RAM model. FYI after installing 16.04.3 and then configuring Ubuntu with the nVidia driver it works fine on my platform:
