Some news. It appears to be an IRQ issue. My 7800GS is assigned IRQ 16 normally.
When the X-Fi is installed the X-Fi is on IRQ 20, the 7800GS doesn't get allocated an IRQ properly hence the 4 bit color and inability to access the nvidia control panel options.
Device manager reports a Code 12 where it should be displaying the IRQ:
"This device cannot find enough free resources that it can use. (Code 12)
If you want to use this device, you will need to disable one of the other devices on this system."
Is there any way to ensure the 7800GS gets allocated a proper IRQ?
EDIT: Joy! Found a totally random fix on Creative forums - just set the AGP aperture from 128 -> 256mb. That so does not make sense