If installing the latest drivers and control panel from ATI has not helped then try reinstalling the motherboard/chipset drivers (over the top of the existing ones ) and re-download and install DirectX 9.0c from click here
You should try running dxdiag (type dxdiag in the run box from the start menu) to see if there are any DirectX issues and also ,if you can access the ATI control panel have a look in "smartgart" to see if your agp settings are ok.If fast writes are enabled try disabling them (in the smartgart panel).
If all this does not work there may be an issue with the graphics card itself.
It could also be an overheating problem. Make sure plenty of air can get into & out of your computer. Try temporarily running with the side off of your case to eliminate overheating as a possibility. If overheating is the problem installing an exhaust fan underneath the graphics card would help.
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