I don't think this is an XP issue; I think it is a Pande-hasn't-updated-the-ATI-client-in-years issue. Here's what I've been able to find:http://folding.stanford.edu/English/FAQ-ATI2#ntoc39http://www.brightsideofnews.com/news/20 ... 4870!.aspx
In a nutshell, try making the ATI card the primary display (if it isn't already), and try launching the client with the -forcegpu ati_r700 switch.
If that doesn't help I'm out of ideas, as I've never tried folding with a HD5xxx GPU.
If the world isn't making sense to you, you're either drinking too much or not drinking enough.