That is the card I have. It worked at first but then after an update it stopped working. Follow these steps:
1. Download the correct drivers from ati.com
2. run chmod 777 on it to change permissions
3. Run it, cd into the directory and then run ./ati-drivers-8.9.6 (or whatever the name is)
4. Just do the standard install and click continue and then "I Agree."
5. Add the following to a new line on your xorg.conf file:
Option "Composite" "Disable"
It should then work.