There was nothing wrong with the formatting and a reinstall is NOT needed.
The Mobile Intel Chipsets are designed to operate in the manner you saw. Although there is no reference specific to the 965 chipset, there are some for the 945 chipset. See the following:
Why does Device Manager show multiple monitors?http://www.intel.com/support/graphics/intel945gm/sb/CS-022204.htm
Why does Device Manager show two different graphics controllers? http://www.intel.com/support/graphics/intel945gm/sb/CS-022194.htm
Hopefully this will save a few people the trouble of performing a complete clean reinstall and then finding that their "problem" is not solved.
Also, if you don't know the answer to something, don't respond like you do.