About the ati2dvag infinite loop problem

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I don't know if anyone still has this or not, but it just struck me out of the blue.

I can no longer open Photoshop, Corel Painter, or Macromedia Flash. I haven't tried it with any others, but it seems to be just memory-intensive programs. Even if I try to just open a file, my computer will freeze for a few seconds, then restart itself - no error messages or anything.
One of the first times this happened, it froze, but instead gave me a blue screen and an error telling me that the ati2dvag has an infinite loop, and it didn't reset my computer, it just lowered my resolution. However, every time after that, it just froze and then restarted and I never got that message again.

I'm at my wit's end trying to solve this. I've had my computer for four years, and I have never had this problem. Nor have I ever had any problems with any of the programs up until this error popped up. This doesn't even happen normally, when I'm talking on MSN or browsing the web nothing happens, but it's only when I try to open the memory-intensive programs that my comp goes into this infinite loop.

At first, when this first happened, When I would click drop-down menus in PS, they would be blank and not appear until I rolled over the options. So I thought, "hey, this is just a memory problem." I proceeded to buy a 2tb XHD to throw 40 gigs of crap onto it, but then that didn't fix the freezing, and I proceeded to rage so hard that I broke the sound barrier.

I don't even know what I did to cause this either, because I didn't do anything unusual. The only driver I had installed was a sound driver several months ago, and I hadn't installed any Windows updates. I just installed Microsoft Project for school, and then sometime after that I think this started happening. I've tried everything to get rid of this, and in my panic I uninstalled that too and still no go. I've updated to Windows Service Pack 3, cleaned my registry, system restore, everything but updating my drivers. You might think that's the most obvious one, but I'm just so wary that the driver could be the problem because this just happened randomly, out of the blue, after years of not having trouble with the same driver.

Is there an actual fix to this, or should I just weep and say goodbye to using my software forever? (until I get a new desktop, which is nearly never)


And for the record, my old, old computer specs pulled from dxdiag:

Code:
   Operating System: Windows XP Home Edition (5.1, Build 2600) Service Pack 3 (2600.xpsp_sp3_gdr.090206-1234)
System Manufacturer: emachines
       System Model: T6212
               BIOS: Phoenix - AwardBIOS v6.00PG
          Processor: AMD Athlon(tm) 64 Processor 3200+,  MMX,  3DNow, ~2.0GHz
             Memory: 1406MB RAM
          Page File: 614MB used, 1217MB available

Code:
---------------
Display Devices
---------------
        Card name: ATI RADEON Xpress 200 Series
     Manufacturer: ATI Technologies Inc.
        Chip type: ATI RADEON Xpress 200 Series (0x5954)
         DAC type: Internal DAC(400MHz)
       Device Key: Enum\PCI\VEN_1002&DEV_5954&SUBSYS_71411462&REV_00
   Display Memory: 128.0 MB
     Current Mode: 1024 x 768 (32 bit) (60Hz)
          Monitor: Plug and Play Monitor
  Monitor Max Res: 1600,1200
      Driver Name: ati2dvag.dll
   Driver Version: 6.14.0010.6497 (English)
      DDI Version: 9 (or higher)
Driver Attributes: Final Retail
 Driver Date/Size: 11/11/2004 22:02:00, 220672 bytes

I might add that I've looked up some other solutions, and a common one people seem to do is change sometihng in the device managers, "Right click on CPU to AGP Controller"
I don't have such a thing (the CPU to AGP controller) so I can't exactly do this fix.
 
Thank you, kimsland, I installed the driver and while the infinite loop crashing did not entirely stop ): , it did seem to quell the beast quite a bit. In Photoshop, it only happened twice in the past hour or so, but I do wonder why it crashes randomly at some intervals (minimizing, opening a file). Though it's much better as opposed to crashing while OPENING the darn program.
 
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