Windows 7 GUI Video Driver Issue: Blocky, Unreadable

This is the first time I've been stumped with video card issues.

I was working on an HP Pavilion g6 model laptop with AMD Vision HD 6310 graphics with black screen issues. I had to end up reconnecting ribbon cable to LCD, easy fix. Right?

Also I was told using Windows Update on laptop would be bad since last person who worked on it loaded a pirated copy of Windows supposedly.

Well, Windows ended up fetching for updates and installed some. I rebooted and I was greeted to this strange madness. Pic attached.



As you can see the Windows interface is all blocky, unreadable. Only the cursor strangely seems perfectly fine. The UI elements don't seem to be rendered if you will. I assumed this was the effects of a pirated copy of Windows.

However, I went as far as reloading Windows completely with legit key (on laptop itself). It loads the default VGA driver fine and I can see Windows, but once I let Windows Update install the AMD "HD 6310" driver for laptop it goes straight back to the blocky, unreadable interface. I have to keep reverting back to Safe Mode and deleting the driver.

Troubleshooting tried:
1) I went straight to HP support site to download latest official drivers for the HP model, "g6 - 1b39wm." After installing, rebooting, same issue. Back to Safe Mode to remove driver.
2) I downloaded older version of AMD Vision same driver. Again, same issue.
3) I went to AMD site itself to download their driver there. Same issues.
4) After installing HP AMD driver again, I tried disabling Themes and rebooting, same thing.
5) When I do boot into unreadable interface, I can click on things and move cursor. If you have good memory and another computer next to you perhaps, you can open up programs still by the way.

At this point, I'm about ready to give up and simply explain to the laptop's owner that only the default driver will work. Unfortunately, no Aero interface, but at least the user will be able to browse internet and watch movies. I'll hide the AMD update for now in Windows Update.

Anyone have any thoughts on this? Could video chip have gone bad? I just want to call it a night already and rest!