Affects me also, on Maverick 10.10.

01:00.0 VGA compatible controller: ATI Technologies Inc RV370 5B60 [Radeon X300 
(PCIE)]
01:00.1 Display controller: ATI Technologies Inc RV370 [Radeon X300SE]

I had tried disabling desktop effects on first user, which allowed
switching to a second user.  Trying to log in as a third user
produced corruption again.  I didn't think to disable desktop
effects on _all_ users.  That will probably work around this
issue until it is fixed.

Could this be related to Bug 656235?

   https://bugs.launchpad.net/ubuntu/+source/xserver-xorg-video-
ati/+bug/656235

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You received this bug notification because you are a member of Ubuntu-X,
which is the registrant for xserver-xorg-driver-ati.
https://bugs.launchpad.net/bugs/565835

Title:
  [RV250] Creating a new log-in/X-session with desktop effects enabled results 
in a garbled new session

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