This seems to be an issue with the latest ATI drivers. We've heard from various people and websites that versions 10.5 & 10.6 of the Catalyst drivers have broken OpenGL 2.0 support. It seems that version 10.4 is that last working version of the drivers.
You can read on
this site about the issues. I would suggest rolling back to version 10.4 if possible, or wait until ATI fixes this issue, .. or get an nVidia card
