If it's not allowing you to even load the setup launcher where resolution, aa/af and distance settings can be chosen then it sounds less of a driver and gpu conflict and more like a general executable compatibility issue.
If you give it a try running in each of the compatibility modes 2000, xp, win 7 and see if it will let you launch it. Just to make sure it's this file to try launching: \Buka\Pathologic\bin\Final\Config.exe
See how that goes with compatibility modes.
If you can then get into the game then problem solved
If there are more issues in game from then on then it might be worth trying older drivers. This might be what you're looking for in that case:
http://www.oldapps.com/ati.php
Not sure which Ati/Amd drivers work best as I use an older Nvidia card to play Pathologic on an XP machine.
Best of luck though and if I can help just give me a shout