After much research on this issue I am pleased to say I found a fix that works. This method may also work for other ATI radeon HD cards as well. Follow these instructions closely and be sure not to deviate to much from them.
I just installed Windows 8 Release Preview on my laptop, and as expected I stumbled upon driver incompatibilities.
My laptop (Toshiba Satellite) runs on a ATI Mobility Radeon 4200 series and like everybody else I got a lot of graphic bugs in most of the games I tried running.
The problem of course lies with Microsoft's preinstalled drivers witch do not seem to work as they should.In order to fix this you must install older display drivers witch of course you can't because window's won't let you( the stock ones keep reinstalling automatically). After spinning my head I came up with this few simple steps to overwrite Microsoft's stock drivers.It may seem a little complicated at first but trust me if you follow the step's you are as good as you can be
Step 1: Make sure you have the older graphics drivers (the ones that you are sure they work).Unpack them somewhere on your HDD for later use(don't install just unpack, the idea is to have access to the .inf files for your driver)
Step 2: Open Device Manager (Control Panel) & locate your display adapter (you should see some Microsoft's stock drivers installed here)
Step 3: Right click "properties" and go to "events" tab. Here you should see a list of the latest events (which driver installed & when). Search for the file that has the .inf extension ( in my case it was "atiilhag.inf").
Step 4: Go to C:\Windows\System32\DriverStore\FileRepository (this is where Microsoft stores all the default drivers for windows) and search for the file you found earlier (using windows search).Once you found it open the folder that contains the file & copy it to another location (for backup purposes).This file contains information about which driver to install (open it and look around you should see information on the driver version and other stuff we don't need).
Step 5: Go to the folder where you unpacked your older drivers( the ones that work).There you should see alot of files and folders.Here you must search for the location of the .inf files (mine were located in a folder named "Packages", but it may differ from software provider to provider). The goal is to locate the .inf file for your older driver. Once you found it open it, it should be almost the same as the one you found in the driver repository folder earlier( the driver version will differ of course) but probably it will have a different name. Rename this file to match the .inf file from windows and copy it to the folder where where you found Microsoft's .inf file (in the Driver Repository).
Step 6: Go back to device manager and uninstall the current display driver (right click: uninstall). This should switch your screen resolution to a lower one(so you know the driver got uninstalled). After this right click any item in the device manager and click "scan for hardware changes". This will refresh your hardware list and a new item will apear (your graphics card, marked as unknown device. Right click it and select "update driver software" select "browse my computer" and browse to the folder where you unpacked your older graphic's driver (the folder where you found your.inf file). It should now install your older display driver without any problems.
Hope this will help somebody, I tried to be as explicit as I could.
!!!!! Please note not to use the setup exe to install the graphics software for the video driver. When you unpack the exe file, follow these steps but do not click the install button, just hit cancel. This will mean that you've extracted the files but have not installed the driver or software. Once you have used these steps to get the driver working, go to C:\AMD\Support\12-6-legacy_vista_win7_32_dd_ccc_whql\Packages\Apps Some locations for others may vary but this is where mine was located.
Next go to CCC2 and then Core-static folder where at the bottom a windows installer package named ccc-core-static will be. Run this to get software working for the driver you just installed. If you run the original installer without manually installing the software it will automatically install the sample driver again and your work will be lost. !!!!!!!!!
Follow these steps for the driver, go into AMD folder and manually install the driver software and you will have control over your graphics performance, such as MIP details and 3d settings as well as Fullscreen stretching in lower resolutions which is ideal for gaming performance.
I've done this and now I'm happily using windows 8 again