Please bear in mind that this product has reached its End of Interactive Support so Intel no longer provides interactive support for this product via telephone, chat or e-mail.
The generic drivers that are posted on the site have been working with no signs of a similar issue since posted. The fact that the generic driver and the customized driver provided by your system manufacturer result in the same behavior could indicate that the issue could be the operating system installation rather than the driver or a hardware problem.
I suggest you to test a separate hard drive to test a fresh operating system install, also try updating the system BIOS.
My Acer T320 has XP on it and the 865GV on the board works fine with the driver Intel has posted.
Mine is recognized as Intel Extreme Graphics 2, however its a basic onboard component.
I am disapointed Intel has EOLed the chipset as my T320 actually works fine.
Originally the machine came with 256 MB of memory but I have now installed 1.5 GB which makes XP run far better.
The generic driver with Windows 7 does not like my wide screen LCD.
Thankyou for your help, fresh install of Windows on the same hdd didn't fix it, but within a few restarts the hdd actually failed (boot disk error, missing dlls etc.), so with replacing it and fresh install of everything the driver is now working ok.