Confirmed with xorg-driver-fglrx 1:7.1.0-8-3+2.6.24.12-17.35

I'm so glad I finally found a temporary solution to this other than
restarting X, it's been killing my productivity!

It seems that even just *stopping* atieventsd causes this problem.  When
atieventsd closes, it runs:

/etc/ati/authatieventsd.sh grant :0 /tmp/.gdmLADPAU

And this changes the ownership to root by running (as root, on line 88):

xauth -f /tmp/.gdmLADPAU add :0 . f3a6e5e2c13b85247eb2cc35bc6a36d5

Obviously, the auth file, display name and cookie will be unique for
each user.

This does add the correct key for the user to access the X server, but
since the file is only readable by root, clients cannot connect.  Is the
intended behaviour of xauth to change file ownership?  If not, then this
bug should be transferred to the xauth package.

Another significant question is whether atieventsd needs to be messing
with the Xauth file in the first place?

-- 
After gdm upgrade no X cliens can be run
https://bugs.launchpad.net/bugs/196464
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