Greetings and welcome to Driverheaven!
First of all we'll tackle the second problem: The Unknown Devices are related to the WDM drivers. As Omega states, you have to download the correct set from ATi for the driver version you're using. Install those and the U/Ds should disappear.
Now for the first problem: Are you using the Windows default settings for your Desktop display? If you are using the Windows default settings, I highly recommend that you make some changes so that your system is set to PERFORMANCE and not something else.
Here's how to make those changes....if you don't know already.
Right click on the My Computer icon.
Select Properties
Click on the Advanced tab
Under Performance, click the Settings button
Now, click on the Adjust for best performance
(This will streamline the overall appearance of the Desktop and you won't have such a fancy looking one, but, you'll have a better performing one....no fading stuff.

)
But, we're not done yet.
After you set the above adjustment, click on the Advanced tab...next to Visual Effects
Make sure Programs is checked in both options.
Now, if you're prompted to restart, do so.
See if things work better now.
Good luck!