Link to his mobo manual for reference:
ftp://174.142.97.10/manual/K10N78M.pdf
Me and nearly everyone I know currently has or has had 4800 series GPUs working perfectly with both Win7 32 and 64 bit versions. Your 4850 card itself is probably also working because it can boot without the installed drivers.
It is probably just some sort of weird incompatibility issue. Maybe BIOS update/settings or different drivers would help. I would've definitely pointed towards the integrated graphics adapter conflicting, but you said you already changed that so heh...