On startup, press F8 to access Advanced Startup Options.
Select Enable Low Resolution Video (640 x 480). This, as Microsoft states "starts Windows using your current video driver and using low resolution and refresh rate settings." The main benefit of starting in this way is that it loads the video drive. Meaning, ATI programs will be able to detect the card, while at the same time the card is forced into running at a low frequency (60 Hz).
Start Vista and try not to cringe at the way it looks.
Access the Catalyst Control Centre (Advanced Mode) and select Monitor Properties. Find the section that says Monitor Attributes. Uncheck the box labelled Use Extended Display Identification Data. Now, even if it says "not supported", set your maximum refresh rate to a rate within the acceptable range, and the resolution to your maximum preferred resolution. Click Apply. NB: This step may seem odd, but it did not work until I did this, even though it says "not supported" for me.
Find the tab which says Displays Manager on the left. Set your desktop to whatever you want. Click Apply, and then OK.
Restart your computer for good measure, and bask in the glory of victory. At this point it worked for me (though, as each system is different, it may not work for someone else, but I don't see why not).
I hope this helps someone! It should, it seems like a fairly common error.