I have an nvidia 8800 GT, have just updated to Windows 7 because I was having trouble with Vista (like who wasn't) but now periodically my screens flash off, then back on and I get an error message saying that 'Display Driver Nvidia Kernel Mode Driver version 196.21 has stopped responding and has successfully started again".
This wouldn't be such a problem if it didn't happen repeatedly, then later my main screen will go white then the monitor I have my game playing on will be fine for a few minutes, but then the whole machine stops working and I have to manually turn the darned thing off.
I have updated both the display drivers and directx.
I'm not sure what you did. But I'll take a stab at it.
Sometimes upgrading drivers can cause issues. Your best bet is to completely uninstall the driver package from Add/Remove programs (all nVidia modules), reboot, then reinstall again.
Also worth mentioning. I've seen a lot of strange things by just leaving the GeForce Stereoscopic 3D driver installed. It gets installed by default with any new or upgraded driver. Unless your using them, just yank them out. They eventually cause more trouble than not. At least for me they did...
This is still happening to myself and 3 others I know of who all have different gaming rig setups from mine.
Display Driver Nvidia Kernel Mode Driver version 197.45 has stopped responding and has successfully started again" thankfully in Windows 7 it will not force you to restart everything.
The problem is that it often happens in a pvp battle which is just SUPER!