I have same bug on my ibm t42 ati mobility 7500 32MB. Therefore i opened 
#437117 bugreport, which is a duplicate of this bug. 
It only appears with ati renderacceleration XAA not EXA. I use XAA because it 
has more performance with karmic koala...

** Attachment added: "notify-osd-ati.jpg"
   http://launchpadlibrarian.net/32725099/notify-osd-ati.jpg

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OSD showing corruption on ATI graphics
https://bugs.launchpad.net/bugs/429295
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