same Problem here. If i install the nvidia-glx-new i have no X-Server. I tried 
to start X via "startx" manually, i got this:
...
67.995556] NVRM: API mismatch: the client has the version 169.12, but
[   67.995560] NVRM: this kernel module has the version 96.43.05.  Please
[   67.995562] NVRM: make sure that this kernel module and all NVIDIA driver
[   67.995563] NVRM: components have the same version. 
...

removing the nvidia-glx-new and installing the nvidia-glx worked for me, now i 
have direct rendering and even Desktop-Effects. But the better and faster 
driver is the nvidia-glx-new.
I hope this helps

Kubuntu 8.04 final - via dist-upgrade from 7.10
Nvidia GeForce 7600 GS

-- 
Regression: nvidia-glx-new incompatible with Linux 2.6.24-16
https://bugs.launchpad.net/bugs/221239
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