Apologies if you already tried this but no-one has replied to you with any suggestions so I am throwing it out there as a possible help.
First there is a new driver for GMA500 released recently for Win7 so update to this.
Then go into the driver properties by right clicking on the desktop, Graphics properties > Options, tick Enable Performance Mode
Whilst still in the Intel driver properties screen, Click on Display Settings > Power Settings and move the slider all the way to the left (Max quality).
By default after driver install Enable Performance Mode is off and Power Settings are set to Max battery. By changing these two settings my Win7 experience index went from 2.8 to 4.6!
Hope this helps (assuming you haven't tried it already)
Thanks for trying to help. I don't think that the new driver will lead to better video performance when I look at the issues fixed. Although, I'll try that when I get back to that project.
For the moment, I switched to the EMGD driver in XPDM mode because of its much better video performance and because I don't need the fancy W7 stuff that is only supported with the WDDM driver - at least not for the moment.
I may as well be switching to a differnt platform (Luna Pier) that uses 3150 media acelerator with - hopefully - better performance, despite some other drawbacks compared to Poulsbo (no LVDS / DVI dual support).