Same problem on a brand new clean install of 8.04B (but I am using a new 
GeForce 9600 with the proprietary 171.06 NVIDIA driver since there doesn't seem 
to be any resolution support > 800x600 available for that video card in Hardy.
I can can compile in the nvidia kernel module and run it AOK, (1280x1024) but 
then, of course, any updating to a new kernel breaks it. 
Symptom is blank window upper left that eventually (after 5-10 mins) displays 
"There was an error starting the GNOME settings daemon". Now the resolution 
remains 800x600 only.

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error starting GNOME Settings Daemon
https://bugs.launchpad.net/bugs/199960
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