I just upgraded the ATI display drivers on my Inspiron 6400 running Windows 7. It was surprisingly easy. First, I downloaded the Catalyst 10.2 legacy software suite for 32 bit Vista. This is a driver for desktop graphics, not for laptops. I ran the downloaded executable to let it extract, but cancelled the actual setup. Then I ran Mobility Modder 220.127.116.11, told it where the driver extracted to in C:\ATI and started the patching. That took about a minute and completed successfully. Then I simply ran the driver setup program and installed the driver normally. That also completed successfully, with no error messages. After the installer was finished, the new driver was already being used, and the ATI icon appeared in the tray. I tried out Catalyst Control Center and it worked properly.
There was no need to disable UAC. Mobility Modder by default runs as Administrator, and that is enough. There was also no need to run the driver setup in Vista compatibility mode, even though this was a Vista driver. I didn't even have to reboot!
The old 8.561 driver I was using before worked fine, so I kept it since I upgraded to Windows 7. I finally upgraded the driver because I encountered a problem with playback in the MythTV front end. The new driver fixed the problem.