This is the only driver for that card to use in Windows 7, http://support.amd.com/us/gpudownloa...-Bit%20Edition
It could also be that due to the unsupported chipset that the AGP port is running in PCI mode. If that is what has happened there are instructions in this thread (it's a long one, and sorry don't remember exactly how far into it it is), Install AGP Drivers for HD 3850, 3650, 2400 PRO
on how to change it with an INF or INI edit.
Till you get the driver to install properly it may not help, but if you haven't you need to run the Windows Experience Index before Aero will work.
As for when I said the card works,
Unfortunately until all the ducks are lined up, it won't work. Only reason I put Windows 7 on that old girl was I was tired of maintaining XP for the wife and kids (more the kids than wife), and threw it on as an experiment and all things considering it runs better with 7 than it ever did with XP.