This is a very common, and known issue with the ATI video driver.  From
what I understand, is basically a whole set of Radeon cards (including
the ATI Radeon Mobility X1600) have poor performance and various bugs
with X drivers (both open source & proprietary).  It's a known issue,
one that doesn't seem to have a solution beyond what you've already
discovered (nomodeset).  My suggestion, try another driver and see if it
works better, or live with nomodeset.

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ATI card requires nomodeset to boot
https://bugs.launchpad.net/bugs/517222
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