I've been to your acer site and it supports Windows 7 as you noted, so somehow things have got out of order
1 try restoring the system to when it was last working properly using system restore
2 download driver sweeper and run it in safe mode then try installing the driver from the ACER website
3 reinstall Windows 7 if you run out of options, and start using backup in control panel, so your safe.
Note ATI 10.1 is a bit of mess up with installation and maybe windows update installed a more recent vga driver (maybe not even 10.1) that has caused the problem - to remedy this happening again do this - type "change device installation settings" in search and select "never install driver software from windows update".
Driver sweeper - Guru3D - Driver Sweeper (Setup) download from Guru3D.com