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H.264 Acceleration causes hangs/blue screens, any way to fix?

Question asked by enableshowrun on Jul 29, 2015

Hello! I have a XFX R7 260X Core Edition/CNF4 with 2GB of memory and am running the 64-bit version of Windows 8.1 with the 15.7.1 version of the Catalyst drivers. Whenever I try to use the AMD GVR (through either the AMD Gaming Evolved app or the generic Raptr client) or switch Bandicam's encoding format to accelerated H.264 my computer either hangs or gets a blue screen. The blue screen is scrambled and I am unable to read it, the system file checker and dicm both say that the system is not corrupted and all updates have been installed. On every startup (weather or not the restart was caused by a crash) a message appears saying that the display driver had stopped responding but has recovered. I have tried installing and reinstalling the drivers and the same issue still happens. I don't even know where to start looking to fix this, any ideas?