Does the ATI have it's own software to play with?
In my experience, changing the resolution in media centre will not help, but you could try it in any event - configure the tv or monitor option in tv setup.
The other option of course is to roll back the driver. Seems to me that most GPU driver updates are aimed at fixing problems for gamers, so it's debatable how much of a step forward you take dropping in a new driver for a box being used for media centre.