Windows 7: Desktop freezes after installing video drivers in windows 7

Config:

Hardware: Desktop

Intel i5-2310 sandybridge processor
Gigabyte GA-H61M-DS2 ver. 2.2 Motherboard
Transcend 4GB 1333MHz RAM
No External Graphics

Software:

Dual Boot - Windows XP SP 2 x64 and Windows 7 Ultimate x64.



Problem:

Everything is working great in XP. After installing video drivers in windows 7, the wizards asks for restart. When i restart windows 7 hangs just after the "starting windows" logo, just at the welcome screen. It is not random, everytime it freezes at the same point. The system hangs and the display is just horizontal garbage lines and I need to hard reset the CPU. Without the video drivers, windows 7 works fine.

Things I tried:
1. Drivers from Motherboard CD/DVD.
2. Drivers from Gigabyte Website.
3. Drivers from Intel Website.
4. Changed the SATA mode to AHCI/IDE in BIOS. XP wont boot in AHCI.
5. XP shows Intel 2000 processor graphics. CPUZ tool in windows 7 shows Intel 1000-T.

so you tried uninstalling the bad drivers and going back to the old ones?

yes i've done that. I hope there isn't any incompatibility with the processor and motherboard. I checked the specs and compatibility sheet.

Do I need an external Graphic card?