In simple terms and being very blunt:
1) If you have a graphics driver issue - then attempt to fix it. eg: get the latest AMD graphics drivers, uninstall your existing driver, reboot the PC to flush its memory, install the latest supported AMD driver for your system and hardware, then my advice would be to reinstall DirectX with the latest version from MS and see how you go.
2) If you think this is an operating system problem, but not an issue with your video card, then I would suggest you consider performing a REPAIR/Upgrade of your operating system, following the normal microsoft process - which will retain all of your data and settings.
here's an easy article:
http://windows.microsoft.com/en-US/windows7/Installing-and-reinstalling-Windows-7#section_7
Attempt step 1 above. Test and see what happens, if that fails and you suspect it's an OS issue, then consider the OS repair.
Before you consider either option though, I would have a think about if your hardware could be having a fault too.
There is no requirement to format windows or anything even remotely close. ....that's a road to a whole lot of data loss or a whole lot of work restoring your system to the point it's currently at (eg: reinstalling all your software).
So before you get started, have a think about your video card and computer.
i.e. could this issue be a hardware fault?
If so, then you might need to ask a friend or computer store to test that video card first, before assuming it's okay.
eg: the symptoms you are describing could quite possibly be caused by the video card overheating or if the video card has one or more faulty components on it. I've had very similar behaviour with a decent NVidia card, when overclocking it to its limits - which results in high amounts of heat.