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If you have an ATI video card in your notebook, (and chances are you do), go to Safe Mode, uninstall the old ATI driver, restart, go to normal mode and download and install an updated version of your driver. Keep us posted...
ati2dvag seems to have a problem with XP SP3
I don't know if you have SP3, but if you do, try rolling back to SP2
Method 1: Use the "Add or Remove Programs" item in Control Panel 1. Open the Control Panel 2. Select Add Remove Programs 3. Click to select the Show Updates check box. 4. Click Windows XP Service Pack 3, and then click Remove. 5. Click Finish to restart the computer after the removal process is complete.
Method 2: Use the hidden $NtServicePackUninstall$ folder 1. Click Start, click Run, type c:\windows\$NtServicePackUninstall$\spuninst\spuninst.exe in the Open box, and then click OK. 2. When the Windows XP Service Pack 3 Removal Wizard starts, click Next. 3. Follow the instructions on the screen to remove Windows XP SP3.
Method 3: Use the System Restore and select a restore point prior to SP3
...if you do this (or have done it) and it does not work properly, try reinstalling the operating system and then installing those drivers fresh after install. That should work. If it doesn't, look in the Acer user's manual for the machine's maximum resolution (for example 1024x768), and then changing the video driver to one of the standard Microsoft drivers, for only that resolution. The problem you are having above seems to be that you tried this solution, but loaded a MS driver for the wrong resolution. So you are probably pretty close on it.