Below is what I had to do to work around this issue - I've been running with the modified graphics drivers for over a week now, including running some games under Windows 7. Apologies if this is too basic, but I figured I would write it out step-by-step for anyone who needed the background, rationale, plus instructions:
Procedure to manually update iMac Radeon HD 2600 PRO video card under Windows 7 (64 bit).
Rationale:
> Boot Camp drivers incorrectly identify the video card my 24" iMac (24-inch Mid 2007 2.8 GHz Intel Core 2 Duo - the graphics card is shown as a "ATI Mobility Radeon HD 2600 XT") - this has been a long-standing problem when using my iMac under Boot Camp. You can find procedures online about how to update the drivers manually by obtaining them from AMD then installing them.
Background:
> When I was previously running Windows XP, I was able to perform the graphics driver update per the online instructions, without any problems.
> When I updated to Windows 7, 64-bit (because I updated my Mac OS to 10.7 [Lion] and Windows XP was no longer supported in Boot Camp), I could no longer update the graphic card drivers to the Win7 64-bit version (it was giving an error that the driver was not supported) using the same procedure.
> The solution I finally came upon was to modify the INF file that comes with the drivers from AMD. I take no credit for this, except for the fact that I adapted a procedure I found for doing this for graphics cards in notebooks. The original place I found this is here <http://forum.notebookreview.com/gaming-software-graphics-cards/370695-guide-upda ting-your-ati-drivers-manually.html>.
NOTE & DISCLAIMER: This is the first time I have done something like this, so I don't claim to fully understand every step that is going on here, nor if every step is needed. I based this on the procedure referenced in link immediately above and it seems to be working for me (that is, my graphics card driver was ultimately updated for Win7, 64-bit just like had been previously under WinXP) - YMMV.
>> This procedure was done with the AMD Radeon™ Desktop Video Card Drivers for "64 bit Windows Vista/Windows 7 "; Version 11.7, posted 2011-07-27 (main page: http://support.amd.com/US/Pages/AMDSupportHub.aspx)
1. Driver only was downloaded from AMD.
2. Downloaded file was installed to default location: C:\ATI
3. Gather info about the graphics card:
3a. Open the Device Manager (Start>Computer [right-click]>Properties)
3b. Expand the "Display Adapters" item to reveal the GPU (mine was listed as "ATI Mobility Radeon HD 2600 XT", same as it was under XP)
3c. Right-click on the GPU and select "Properties"
3d. Click the "Details" tab in the Properties window.
3e. Click the drop-down under "Property" (top item should say "Device description) - find the item in the list that says "Hardware Ids"
>> There were four values for my card, shown below:
PCI\VEN_1002&DEV_9583&SUBSYS_0083106B&REV_00
PCI\VEN_1002&DEV_9583&SUBSYS_0083106B
PCI\VEN_1002&DEV_9583&CC_030000
PCI\VEN_1002&DEV_9583&CC_0300
3f. Right click on the first value and select "Copy" - paste it into a separate document. I actually copied all these items and pasted them into a separate text document, but only ended up using the first one.
3g. Go back and click the drop-down under "Property" - find the item in the list that says "Inf section" (it was far down the list).
3h. Copy the value shown there and paste into a separate document; my value read: ati2mtag_M76
4. Modify the INF file from AMD:
4a. First thing I did was make a backup copy of the directory containing the files that were installed in step 2 (located at C:\ATI) - my directory was called "11-7_vista64_win7_64_dd".
4b. Go into this path: C:\ATI\Support\11-7_vista64_win7_64_dd\Packages\Drivers\Display\W76A_INF
4c. Find the INF files (icon is a document with a gear on it), that start with "C7..." and "CH..." (mine were called "C7122569" & "CH122569").
4d. Open the "C7..." file (it opens in Notepad). Go down to the section called "[ATI.Mfg.NTamd64.6.1]".
4e. Do a "Find" command for "ATI Radeon HD 2600 PRO" (if you search for a shorter phrase, be aware there are other "2600 PRO" cards in the list).
>> The exact line I found was <"ATI Radeon HD 2600 PRO" = ati2mtag_RV630, PCI\VEN_1002&DEV_9589>
4f. Replace that line with the Inf section value and the first Hardware ID value, using the same format as the orginal line.
>> The new entry I made read:
"ATI Radeon HD 2600 PRO" = ati2mtag_M76, PCI\VEN_1002&DEV_9583&SUBSYS_0083106B&REV_00
4g. Close the file, saving your changes.
4h. Repeat steps 4d - 4g, using the "CH..." file.
5. Updating the graphics driver using the modified INF files:
5a. Go back to the Device Manager and expand the "Display Adapters" item again to show the "ATI Mobility Radeon HD 2600 XT" GPU
5b. Right-click on the GPU and select "Update Driver Software..."
5c. In the resulting window, choose "Browse my computer for driver software".
5d. I navigated to the "C7..." file along the following path: <C:\ATI\Support\11-7_vista64_win7_64_dd\Packages\Drivers\Display\W76A_INF>
5e. At this point, I was shown a window that showed "ATI Radeon HD 2600 PRO" twice (that's all that was in the list). I selected the first instance and it moved on.
5f. I got a warning that the driver was unsigned, obviously I allowed it to move forward with the installation.
5g. The updating proceeded and the screen momentarily went black, twice. After the second time the description in the Device Manager changed to reflect that the GPU was now "ATI Radeon HD 2600 PRO".
FINAL NOTE: as of right now everything seems to be running properly and I have experienced no problems or graphical glitches. If anyone reading this sees an obvious problem with what I've done, please let me know.