Well -- unfortunately, I am almost out of ideas and at this point would suspect something may be wrong with your hardware or Windows installation.
The intended meaning of the error message you get is to inform you that you are not using the Intel chipset graphics and are trying to install the wrong driver. You seem to be pretty sure about that and probably are getting it for another reason, but I have never encountered it in any other circumstance (and it doesn't look like anyone else has, either -- according to a quick Google search).
A couple more things you can try -- install the most recent
DirectX if you don't already have it and try again. A minimum version of DirectX requirement is not unusual for graphics drivers. You can also install the the
Intel INF update, although I don't think that will be helpful in this situation (it should do no harm, however).
It sounds like you have reformatted recently and that is why you need the driver. It may be worth doing again. Since you mentioned installing SP4 the first thing, perhaps this time try to
not install it until after the graphics drivers. My usual order would be: Windows, Intel INF update, graphics and other drivers, latest service pack (if not slipstreamed), updates. It should not matter, though.
