Okay, so this just gets weirder.

I purge removed xsplash to ensure that wasn't the issue.  It isn't.

Session type xterm works flawlessly, as did installing direct from menu
rather than live desktop.

Session type gnome dies a horrible flame death of fail.

In xterm I checked the res of the screen and it's correct.

-- 
Ati driver issues when logging into desktop
https://bugs.launchpad.net/bugs/423415
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