Seriously every time I update my ATI drivers I end up spending 2 days fixing all the things that went wrong because of it. You think I'd have learned by now, I've been using their crap since 2005. Next time I'm going with Nvida.
I mentioned in another thread...
Have you cold-booted your system? I've found that my ATI cards sometimes flake out and cause bluescreens if I reboot without coldbooting.