I can confirm the bug as well. Seems to me that its related to the
compositing in metacity, for everyone here with the problem has it
turned on.

Ubuntu 8.04, ATI Radeon 9800 Pro (radeon open-source driver from repos),
metacity with compositing.

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fade when logging out doesn't work properly with metacity compositor
https://bugs.launchpad.net/bugs/181647
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