I recently resolved an irritating problem of warnings popping up every time a user tried to print to a shared printer using Windows 7 following a reboot. The message "Install Driver" would appear meaning the user had to watch the driver installing every morning before they could print. Having tried other drivers and various security settings it became clear that it was a local policy setting. So, this is what to look for if you to allow a printer driver to install itself automatically without the warning. (This applies to a PC on a workgroup not on a domain so you could apply these changes to a domain policy instead if necessary)
Navigate to the computer's Group Policy Object by opening up Microsoft Management Console and adding the Group Policy Object editor snap in for the Local Computer.
Find Computer Configuration > Adminstrative Templates > Printers > Point and Print Restrictions
Firstly Enable it and change these settings:
Users can only point and print to these servers - Untick
Users can only point and print to machines in their forest - Set to 'Enabled'
When installing drivers for a new connection - Set to 'Do not show warning or elevation prompt'
When updating drivers for an existing connection - Set to 'Do not show warning or elevation prompt'
Hit Apply and close.
Next you need to apply the new policy on that PC. Open command prompt and type: gpupdate /force.
Reboot the machine and test. You should be able to print successfully without the warning prompt.