I have a 5570 that runs 1gb of DDR3 and it gave me the choice to continue, which I hit yes, and it works fine. Runs at 1280x960 with no hitches.
The rest of my rigs stats include:
So that's why I'm curious if your problem might just be a driver issue. All I know is that I downloaded the newest catalyst version which was released the end of March. Sorry can't help you more, but I hope this information may throw you in a better direction. Have you tried disabling UAC / running in Administrator mode?