Why not try using a different player like Real Player or VLR, I know its not a fix for you WMP problem but if one of the above works fine then go with them.
Thanks guys, but because it is a video card driver, changing or using another program other than wmp will still give me the same problem as the problem is not necessarily wmp's.
Rolling to the previous drivers did not help either.
Thanks dude se, I took your advice and installed Winamp, played a file and bang, same problem, ati driver not functioning!! Whats going on around here? HELP!