I have a problem like yours with the last updates on Hardy with an ATI card:
https://bugs.launchpad.net/ubuntu/+source/xserver-xgl/+bug/220001
I've posted my Xorg.conf and its log.

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[Hardy] Dektop effect on Ati Xpress 200 - (Video) Performance problem ?
https://bugs.launchpad.net/bugs/205016
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