Problem with Aero - Windows 7 Pro

I recently installed Windows 7 Pro and have a problem with Aero.

Windows performance shows 5.9 for the Graphics - lowestoverall score 5.3 for gaming.

I have 2 problems

- Right click on the taskbar shows options to Cascade, Stack and side by side.
If I choose cascade it cascades in solid panels not aero style
- if I drag windows to the side it does not snap them to the side of the window, it simply reduces them in height and leaves them half dragged off the desktop.

I have checked all the settings and they seem correct.

If I run the Aero troubleshooter it reports no problems - this is what I get in the troubleshooting window


Where can I look next to resolve the problem - any ideas?

Yes, they are the latest Nvidia drivers.

I have 2 Discs in the laptop with dual boot (Vista and Win7), and using the same hardware and drivers Aero works perfectly in the Vista system.