Hm, I installed -15 versio of lowlatency kernel and Nvidia drivers work
again (and modules load).

Could it be that my installation just has some conflicting files with
-generic kernel, though I have uninstalled nvidia-glx with --purge?

Still, with -generic both vanilla and ubuntu's nvidia kernel driver
fails to load, manual modprobe nvidia gives same install error.

-lowlatency kernel doesn't have paravirtualization enabled, wild guess
why that one works?

-- 
2.6.20-15-generic breaks X when using NVIDIA-glx drivers
https://bugs.launchpad.net/bugs/106434
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