What wubi does is to just install linux files in a folder in your windows directory and i think it uses the xp's own bootloader to load linux from it.
But i would recommend you to not go for wubi and install ubuntu in a separate partition as it is generally seen that ubuntu doesn't run that well inside wubi and there may be some hardware incompatibilities.
About the driver issue, if you can bring terminal up (taken from
http://ohioloco.ubuntuforums.org/sho...low+resolution )
This code will reconfigure X manually....
Code:
sudo dpkg-reconfigure xserver-xorg
This code will reset X back to default (if the original xorg.conf exists)....
Code:
sudo dpkg-reconfigure -phigh xserver-xorg
This should solve your issue.