Hi there, uninstall your current video card drivers, run driver sweeper to remove any leftovers from the uninstall, reboot and install the latest catalyst driver (10.12) which has support for both, your card and windows 7.
EDIT: oh noes, i just re-read the whole thing, i misread, it's mobility radeon, i think there's no support for that card in windows 7. i'll post back in a few minutes
OK, here's what i found on the forums, check those out
ATI Mobility Radeon x1300 Driver Download/Install Error