I have similar hardware (i945) which works fine with Xorg-7.5.
If it helps, here's the relevant sections of the xorg.conf I use: Section "Monitor"
Identifier "VGA"
EndSection
Section "Monitor"
Identifier "LCD"
DisplaySize 260 162
EndSection
Section "Device"
Identifier "Card0"
Driver "intel"
VendorName "Intel Corporation"
BoardName "Integrated Graphics Chipset: Intel(R) 945GM"
BusID "PCI:0:2:0"
Option "Monitor-LVDS1" "LCD"
Option "Monitor-VGA1" "VGA"
EndSection
Section "Screen"
Identifier "Screen0"
Device "Card0"
Monitor "LCD"
SubSection "Display"
# Viewport 0 0
Depth 24
Modes "1280x800"
EndSubSection
EndSection