PC Freezes after installing video card

ive had this problem for sometime now. here's the story.

my 8400 died and i was running onboard graphics with no problem at all just not a quality gaming experience for me. after a few weeks i bought Palit 9800gt green. i thought i could save money since it uses less power.
Problem is, it gave me more headaches instead! My pc keeps on freezing randomly after i installed the card. i installed the drivers from the cd that came with the card, used the latest version from nvidia website to no avail. Oh and btw when i used the latest driver from nvidia but i was receiving garbage view.
I bought new psu HEC 550W rs 80+ thinking my 2yr old generic 600W couldnt handle it. To no avail.
I brought the card back to the shop, the technician tested my pc I had 1 bad sector for my hdd and my rams passed the tests. He advised me to delete some files coz my local c is already 90+% full
He cleaned my cpu and fan too.
After he took out my card and said they'll be bringing it to the manufacturer for further testing. im running again thru onboard vga. AND it's freezing randomly too! The technician said the card could have corrupted my OS.

So i reformatted my pc. Im now from xp user to win7. I deleted the files from windows old. Reinstalled drivers.

But i still have this lockup issue.

I removed the cards one by one swapped the rams removed the cmos also opened the casing and directed the electric fan inside.

Specs:
Windows 7
Foxconn 45cmx
Intel Core 2 duo 2.4ghz
2x1GB RAM
cmedia soundcard
hec 550w cougar

Any help is greatly appreciated!
 
...the technician tested my pc I had 1 bad sector for my hdd...
I would replace the hard drive. It's failing and could be the main problem.
 
new problem!

okeeey here's another problem. i updated my bios last night using Fox Live update sumthing. after i rebooted, my pc showed the memory was only 1024mb when its supposed to be 2gb! also in device manager it says 1.00gb when before the bios update i had 2.0gb showing correctly. what gives?? @_@

i guess ill test each slot later.. could you please help on what should i be looking into?
 
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