Total system failure HD4250

I have an issue that I cannot seem to solve. I will describe it first and then the tech specs will follow. I am a student and often have 3 programs going at the same time; Windows Media Player, Microsoft Word and Microsoft Excel. I do my research and homework while watching my shows or music (don’t really watch just listen). The problem is either I am setting it up, or I have got it set up and then everything starts to “stutter.” What I mean is:
Everything stops working. I do not touch anything thinking that if I let the Graphics card catch up it’ll be fine. What happens is Audio on my WMP plays continuously, then a single shot appears on the WMPlayer. Then it jumps to Excel and displays the page I am on, than it jumps to Word and does the same thing. I sat and watched to see what is happening, and it just keeps going in that sequence. WMP, Excel, Word, WMP, Excel, Word, etc. Eventually what happens is I lose audio and get a “buzz” silence “buzz” silence “buzz.” If I hit CTRL+ALT+DEL I get a failure message that tells me to hit ESC and then use the power button to shutdown my laptop.
I have updated the graphics card driver to the newest version and get the same results. I moved to Microsoft Office 2010 and the same thing. I even did a system recovery and left everything at factory specs and still got the same result. If anyone has any ideas of direction they can provide it would be greatly appreciated.

When I hit CTRL+ALT+DEL .. This is what it says:
The logon process was unable to display security and logon options when CTRL+ALT+DEL was pressed. If the operating system does not respond, press ESC or restart the computer by using the power switch.

SYS SPECS
Sys Model: HP G62 Notebook PC (HP G62-229WM)
BIOS: Hewlett-Packard F.07, 4-27-2010
OS: MS Win 7 Home Premium x64
CPU: AMD V120 Processor, 2200 MHz (1 Core(s) 1 Logical Processor(s))
Driver: Provider-MS / Date: 6-21-06 / Version: 6.1.7600.16385
Total Phy Mem: 2.74GB
Video Card: AMD M880G w/ ATI Mobility Radeon HD4250 (Location: PCI bus 1 / Device 5 / Function 0)
Driver: Provider-ATI / Date: 9-19-2010 / Version: 8.770.2.1000