Two problems with your set up,
1. The chipset on your motherboard. It is the NF3 and Nvidia hasn't supported that since the last XP update from November 2005 (and never released a Vista driver
for it). As a result of that I'm not sure what is being used for the AGP/GART driver, which is required for your AGP card to work properly. Have a look around here, View forum - nForce Drivers • nForcersHQ.com
been a while, but pretty sure that I saw a re-mix of drivers
for that chipset that worked with Vista; might get lucky and find something that will work with 7.
2. Your AGP card. Without the AGP driver mentioned above, you're going to have problems. Also ATI never officially supported that card (or any of the HD2xxx or 3xxx series in AGP), but they do put out the AGP hotfix driver for it, Catalyst AGP Hotfix - Radeon HD 3000 and Radeon HD 2000 Series AGP products
Save that link as it will be the same every month when they release the hotfix, they'll just update the download links.