Hi M00f
I have pretty much the same setup as you, except I have a Firewire 410 and have experienced the exact same problem.
Go to AMD/ATI site and upgrade your graphics driver to version 8.4
http://game.amd.com/us-en/drivers_ca.../integrated-xp
After complete of format and reinstalls of Windows, calls to M-Audio techs and every other possible driver upgrade/downgrade etc this worked.
Hope that helps
SP