It's a shot in the dark, but I figured I'd ask here if anyone else may have run into the issue and found a resolution.

My main rig is as follows:

AMD Phenom II X4 955 @ 3.2GHz (Deneb)
ASUS M4A7TXD Evo
4GB of G-Skill Ripjaw DDR3 1600
2 x XFX built ATI HD-5770 1GB

Running Windows 7 64bit with all applicable updates.

The issue is that the cards either in tandem or apart won't upgrade to any Catalyst set or driver from 10.1 or higher. When I attempt, the system flashes as it tries to install the driver and returns with a black screen displaying a blinking cursor in the top left corner.

You can hear Windows operating in the background (for instance if I lock the terminal you hear Windows lock, and likewise it will unlock). It does not recover from this state. If I force the machine to shut down and start back up, it gets to the Windows splash screen, the keyboard and USB peripherals blink, but then the machine locks with the logo on the screen. At that point the keyboard doesn't function (num-lock does nothing).

The only resolution is either to boot into safe-mode and manually remove the driver, or to allow system restore to take the machine back to a restore point.

Thoughts?

ATi does have a forum for drivers, they even have a guy specificly to answer questions on there, though he's a dick so don't expect much.
Also never complain, even if it's broke and they know it, complain=ban.

It's most likely an issue with the 5700 series cards and the drivers. Is there a hotfix for that series posted on their website? They have them occasionally.

just doing a quick search on the net there appear to be quite a few odd problems popping up with the new 10.3 release and the 5770...

one chap found that having his old CRT plugged into the card stopped the display driver kicking in, he switched to just having his HDMI plugged in and it worked.

All I can say do the basics, double check you have the correct release and driver set, maybe also try just the driver and not the full CCC suite.

Either way I don't think you are alone in this issue and it sounds pretty strange.