Same problem here, after upgrading from 6.06 to 8.04.

The machine is a 2100+ rated AthlonXP with suited Board, 1GB Ram, no
other fancy hardware.

I would be very happy to see a solution here, because this bug renders
my setup unusable.

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Error starting gnome-settings-daemon while logged in via vnc
https://bugs.launchpad.net/bugs/239342
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