that kind of video card is a friend to every game.
I dunno what the deal is, because the demo works fine on my similarly configured PC, in fact it runs smoother than games like KOTORII (mainly because KOTORII has ATI issues, but oh well).
...check and see if the resolution/refresh rate the demo is putting out is the native resolution on your monitor, 7800 being so new should ship with the latest drivers, so I think you should be fine there. Other than that, what about other games? Do they run well on your compie?