Okay I ran a simple test yesterday and I believe it confirmed where the problem was coming from.
I have been trying to get rid of Atikmdag error by doing all kinds of things, fresh windows 7 installs, ram tests, disabling UAC, trying different driver sets, installing just the display driver and no CCC, adjusting gpu/memory clock speeds, disabling flash 10.1 hardware acceleration etc. All of that still resulted in the error.
Yesterday however, I simply decided to remove my ATI drivers and left the computer on with tons of things running. I woke up this morning and it's still running. Normally with drivers installed my system would go down within the hour. I'm going to leave my system on all day and see if it still works by the time I get back home.
I have a hunch it will still work.
Problem now is without any drivers I cannot game. What can I do?
All I can say is, I had an XFX Radeon HD5870 and in some games, it would give me the GSOD screen (gray screen of death, the striped one) and other games were totally unaffected. I ended up RMA'ing the card. Still awaiting my reseller for their diagnosis.