As I had the same problems I tried to modify my xorg.conf. What helps
was to disable DRI2 and enable DRI. My working xorg.conf for my radeon
7000 (M6LY):
Section "Device"
Identifier "Configured Video Device"
Option "AGPMode" "4"
Option "AGPSize" "32"
Option "DRI" "true"
Option "DRI2" "false"
EndSection
RenderAccel is XAA per default.
Working means that notifications and compiz work as expected.
--
Notification and similar dialogs are displaying corrupted after update on Karmic
https://bugs.launchpad.net/bugs/416001
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which is the registrant for xserver-xorg-driver-ati.
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