I used to have almost the same exact problem as you have. This might have no relevance at all and might not fix it, but this was my solution.
So way back when I first built my computer, I had a 965BE, similar to yours, and a 2GB 6950. Ran fine for awhile. Then this "display drivers has failed" error started to come up. I figured it was the card, since I had tried all drivers and stuff. Then, my friend upgraded his 8800GT, and I thought I would just use that until I could find out what the problem was. Turns out that was not the case.
I slaved for hours over what the problem could possibly be. One day, while staring at the components of my system, I figured I may as well try everything, and took out 2 of my 4 sticks of RAM, and PRESTO, it worked.
Anyway, I'm not saying that the RAM is the problem, I'm just saying investigate everything. It could be an overclock, or even a power supply issue.