I see the exact same problem on my Thinkpad T41p with ATI  Mobility Fire
GL T2. The problem appears to be the radeon drm kernel module has errors
when it's loading. So no 3D acceleration what so ever works.

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[gutsy] Regression - "Desktop effects could not be enabled" on ATI Mobility 
Radeon
https://bugs.launchpad.net/bugs/144077
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