Uninstall it again, then in safe mode use driver cleaner pro and select ATI. This hopefully will get rid of all remaining ati files, and you may be able to install an older version (or have another bash at 7.9).
I would go back to my old driver if i remembered wich version it was. But chance is, i already tried. Since i tried installing every driver down to 7.4, i'm sure i have had my old version installed, even tho i don't know wich one.
It's something permanent, "stuck" in the system. Driver cleaner is supposed to clear it all, so i really don't get it.
I googled around some more, and found that the service that fails (ati2dvag.dll) is part of ATI's SMARTGART application. Supposedly, it checks the compatibility of various AGP functions (Fast Write, AGP x4/x8) on startup. I tried disabling SMARTGART in my services.msc, but no luck.
Think i should post this in the graphics forums, aswel as just the ATI subforum?
Solved : After doing a VERY deep search for everything ATI on my harddrive, and rolling back to 7,4 (one version lower then the ones i tried so far) i can now boot correctly.
May also want to make sure you have your motherboards latest chipset drivers, specifically, the agp drivers. I would suggest getting the latest drivers that the motherboard maker has on their website as opposed to getting the latest drivers from the chipset maker.
I haven't had any luck with anything newer than the 7.1 Catalyst drivers myself. Omega drivers and ATI Tray tools haven't helped either.