I used to have problems with my 4850. It's a reference design form Sapphire (so much 'reference' that the only difference was a Sapphire sticker glued over the reference sticker 😛 ). That card would heat up a lot.
Well, par for the course for a reference 4850 with a reference cooler.
So, the first thing I did was tweak the VBIOS (I run Linux, on which AMD have yet to issue programmable power profiles) in order to get lower idle frequencies (and heat) and higher fan speed on load. That stopped several heat-related crashes and, after some tweaking (finding the best frequencies and voltages) no more corruption.
Said corruption was noise in accelerated 2D in Windows XP. Never grey screens nor bars.
But, starting with Catalyst 9.9, I would get initialization problems under Xorg. Please note that, according to an AMD engineer, most of the driver code is common from one OS to the other, using only an OS-specific intermediary layer. I couldn't solve that problem, no matter what I tried: new PSU, different compile options, disabling ACPI, modifying RAM timings, resetting VBIOS to factory...
What solved the problem was, a different motherboard. I went from an Nvidia 6150 s939 board to an AMD 785G AM3 board (yes, I of course had to change the CPU, but that old X2 3800+ deserved its retirement). And then, most problems stopped - I would still get hangs once in a while on Xorg initialization, but even that stopped altogether with Catalyst 9.12, which came out a few weeks after I had reported the bug on a forum where AMD engineers dawdle. I have yet to try 10.1. Did it come from the chipset, from unstability stemming from the mobo's age, a conflict in the BIOS (which predated even R600 cards)? No idea.
But, I'll say it right here: card drivers are very sensitive pieces of engineering. An update in Win7 could have indeed triggered the bug for some; for others, it might be RAM access; for others yet, a more stable PSU; and for others, a bad mobo/GPU combination. It could even be that your card's manufacturer didn't follow reference designs and get funky with the drivers.