Ok. I think I figured this out for you. That model has 2 video cards in it. First is the on board intel card that you currently are seeing and have installed. Of course, the second is the Nvidia 310M.
You have a notebook that is capable of switching back and forth depending on if you want performance or greater battery life. I'm sure you know all of this already.
To solve your problem, you need to go into your BIOS which I believe is F2 for that. There should be a section for VGA or Video. This should have two options: Reserved and Win7. Make sure to select Win7. This should turn your Nvidia card on and allow you to install the driver.
I would recommend using the Asus driver in this case since it should be customized to your system to allow the graphics switching.
This is actually a fairly common problem with a lot of laptops that had the 310M card from Asus. Essentially, your card isn't even turned on, so the computer doesn't recognize it and won't allow you to install the card.
Try this out and let me know how it works out. If there are still problems, we'll see where we can go from there.