Video Driver crushes with Windows 7 Aero interface

I had a long story of trying to run a new Sapphire Radeon HD 4650 AGP graphic card on my old PC. Finally, having read several dozens of articles and forum pages on the Internet, I did manage to make Windows 7 accept the ATI/AMD driver instead of cyclical restarting on startup. Older NVidia drivers are removed, registry cleaned, etc.

Now I am on the second stage: driver works fine with Basic/Classic interface. If I decide to switch to Aero, any program can potentially cause driver crush (black screen and then Display Driver Stopped Responding and Has Recovered message). I don't believe it's a power issue as all the games that require high performance run properly (please don't suggest to try other power supply unit). On the other hand the use of office applications and even browsers leads to driver restarts, e.g. it is almost inevitable when I am typing a message in The Bat! mail client.

I've seen some similar problems but no solution so far. Any idea?

Motherboard Abit NF7-S v2.0., nVidia2 chipset
BIOS v.27 (v.28 is the latest but according to changes log it does not fix anything relevant)
CPU AMD Athlon XP 3200+
RAM 2×1GB DDR400 (i.e. 2 GB)
Sapphire Radeon HD 4650 - 512 MB GDDR2 - AGP 512 MB
PSU AOpen AO350-12APNF 350 W (again, it's not what causes to my problem)

Driver: 10-7_agp-hotfix_vista_win7_32_dd_ccc.exe (was the newest one when I installed it about a month ago)

Have you run the Win7 upgrade advisor? Are you certain you meet the minimum requirements for Aero?

http://www.microsoft.com/windows/w [...] visor.aspx

Unless you have tested said Power supply, you can not eliminate it as a source of trouble. You can think it isn't related to the PSU, but you can not be certain.

Were you having problems before the graphics upgrade, or has this been a problem since installing?

I do meet those requirements. With an old Gf 7600GS there were no problems with Aero.

Agree, but it the most unlikely cause of the problem. According to PSU reviews I have one of the best PSU in its class; besides, I unplugged 2 DVD drives, 1 HDD (out of 2), etc, while the problem persisted. As I mentioned, games like Stalker run properly with the top settings, while simple office applications do not.

Thank you, will try that on the weekend.

make sure the card is at stock clocks as well, i find that when i overclock at all, the card becomes unstable with anything other than games, i.e. media, and aero