I use to use the following sequence of events: uninstall the display driver and the ATI Control Panel using Add/Remove Programs, reboot, cancel out any Hardware Wizard/PnP detection dialogs during the reboot, install the latest WDM capture drivers, NO REBOOT, install the latest Catalyst display driver, REBOOT, then finish with installing the ATI Control Panel followed by a final reboot. Never had any problem with this method on Win2K.
However, if you have a broadband connection, ATI is now providing an "all-in-one" shot at the download. It's about 16 MB in size and consists of the Cat 3.6 display driver, the WDM capture drivers, and the ATI Control Panel.
I just downloaded this 16 MB executable, doubleclicked on it to install EVERYTHING (WITHOUT uninstalling anything; this was a first for me!), rebooted when prompted, and everything came up fine. I hope this is how future updates go because it's a lot less of a hassle. I've been testing out all of the functions and everything still works (using MMC8.5 on an AIW 9000 Pro).
The only anomaly that I see (this is an issue that I always go through whenever I update the ATI Control Panel for some reason) is when you rightclick the ATI Control Panel (system tray icon), the ATI Programs folder containing *short cuts* to the ATI MMC apps: TV player, DVD player, Library, etc. is gone. No big deal because this can be easily fixed by editing the registry (the Icon.reg and IconTA.reg keys seem to disappear during the uninstall/install of the ATI Control Panel). I keep backups of these keys and append them to my registry once I'm finished with the updates...
Using an AIW 9000 Pro (MMC 8.5)