I am running gutsy with latest updates (Aug 13, 2007) and I get this
same error.

I am running on a macbook, using an intel based video card.

Enabling or disabling Desktop Effects works properly, but the error appears on 
each launch of the application.
(System > Preferences > Desktop Effects)

** Attachment added: "nvidia-error.png"
   http://launchpadlibrarian.net/8797583/nvidia-error.png

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"nvidia hardware not available" when enabling "Desktop Effects" - I'm using ATI
https://bugs.launchpad.net/bugs/131141
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