Changed the motherboard, put in the old RAM as 4GB (2x 2GB) and guess what, it failed the advanced memory test in the first 2GB. Put in two new DIMMs of exactly the same memory in the new motherboard and the advanced memory test passed on all 4GB. Windows 7 now installed - no problem. Because both of the faulty 2GB DIMMs pass when tested independently in the old motherboard, the logical choice was think it was a motherboard problem. But it turned out to be a RAM issue. RAM manufacturer will be contacted.