Windows 7 is not currently a POR (plan of record) O/S supported by the embedded product teams. As such, IEGD (our current embedded graphics driver) by design will not install properly on Windows 7. The GMA500 driver is not supported by the embedded teams so if you are using that, we cannot offer much help. If you are using the defaut VGA driver in Windows 7, then it will not support any of the important capabilities of the chipset and your the experience is to be expected.
You do not state what driver you are trying to use so we cannot give you any specific advice, however if you were to use IEGD on XP, XPe, or Vista then we would be able to give you help.