Sorry couldn't reply earlier as was busy rectifying the problem.
My system has been rectified yesterday. As per advice given somewhere, I followed the following sequence and it really worked
1. Win 7 64-bit installation
2. Installed all latest drivers (such as chipset, audio, LAN, etc.) excluding the graphics drivers from intel. (
http://downloadcenter.intel.com/). Of course all the drivers were 64-bit.
3. Installed Windows SP1
4. Installed all the latest updates for windows 7. Left out the browser updates and unnecessary ones.
5. Installed the intel graphics driver from CD.
One thing left is to try the
latest graphics driver from intel but I would do that later as this has already given me lot of headache.
I learnt a way to progress with this problem is to create a restore point before installing any driver. Whenever I faced problem after restart, then the system could be restored to the saved restore point in the safe mode.
This helped me in knowing that the problem was with graphics driver.
I have connected the monitor with a HDMI cable. My understanding is that the problem is with intel onboard 64-bit graphics driver. Anyone having a external graphics card will not face this problem.
Thanks everyone for helping me in resolving this.