How to fix this? Display Driver Stopped Responding and Has Recovered

You can't. Looking on Nvidia's site, they no longer support that card. 96.85 is where driver support ends for the FX 5 series.

The driver may also be crashing. Did you turn down any settings? I've never played it, so I don't really know if it's that graphically demanding, but on the Sims 2 site, it says the more graphics memory the better, so IDK.

I had this problem with my old XPS Laptop which had 2x8800MGTX + VISTA HP on it and i couldnt fix it at all,i tried many drivers but they didnt help,a friend recommended me to install XP but i didnt (because i had sold it ) i recommend u to do test with XP and see if its fine or not

its not because your card is "out of date" or because you need to install the drivers again i went throgh all that. i had spent 3 hours doing what everyone had said and noone was correct. all i did was shut off the computer pull the card out, reinstall it and rollback your driver if that didnt work and there you go. i know it seems silly but trust me it works.