The Windows 7/NVIDIA conundrum

So...
It's been almost a month since I've dusted off the old PC and been trying to breathe some life into it. Here was how it was when I took it off the shelf:
Asus M2n MX
NVIDIA 256 GB onboard graphics
1.5 GB RAM (333 MHz..read as 'really old')
Creative Audigy 5.1 sound card
It booted up absolutely fine into Windows XP Pro which was what I had left it at about a year ago. At one point, I had of course fallen into the Windows Vista trap and installed the Enterprise edition. Needless to say, I removed it as soon as I started seeing problems with my games, I remember it wouldnt even run AoE 3! Fortunately, I had had the prudence to not remove Win XP, preferring to dual boot.
With Win 7 already RTMed, I decided to give it a try. But first, I wanted to juice up the box. I got 3 of more GBs of RAM. Win 7 64 bit worked perfectly fine. the plus was, this time I connected it to the LG 32 inch LCD (HD Ready) display. I was able to get a max resolution of 1368x768.
For a while...it was all good.
Then, I went and got greedy as usual. With Napolean Total War and Starcraft 2 coming up, I wanted a real GPU, atleast one that could fit into my budget. I got the NVIDIA 9400 GT with 1 GB memory and some kind of obscene max resolution. Installed it into the cabinet, enjoyed the sound of it whirring up aaaaand...poof...blue screen.
0x0000008e
Oook. Maybe it was one of those RAM sticks that I had purchased. I tried to switch out cards, changed RAM ports, the usual stuff. Worked fine for a while, and I actually got around to installing the drivers for the GPU through Windows update. Bang! Blue screen
0x000000ce (MEMORY_MANAGEMENT)
And so randomly. It wasn't like I was playing a game, taxing the system or even running intensive applications. This last one looked like it was being caused by the windows search indexer (atleast thats what support.microsoft.com said). I disabled the thing. and for a while, it worked...and it was good.
That's about when things really hit the roof. I started getting blue screens on boot up, when IE opens, when I leave it alone for a few minutes...and whenever else the PC felt like it. Got everything from BAD_POOL_HEADER to SERVICE_MANAGEMENT. Never since the days back in Dell support have I seen so many blue screens. I ventured again into the internet and finally discovered within some windows-bashing sites that this is because of the problems with the NVIDIA drivers for Windows 7 64 bit systems. And as expected..no resolutions available.
And that's where I am at right now. I have a copy of Win 7 32 bit on one hand and my trusted old Windows XP Pro on the other. Do I dare try Win 7 again and (possibly) go through another round of frustrations?