Well, the new 8.11 ATI driver release cured the problems for me.  I have
an ATI Radeon 9800XT (RV350/R360).  (I downloaded the 8.11 driver from
ATI and installed that, then went back into the
System->Administration->Hardware drivers and enabled there as well.
Driver is working fine.

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r3xx Hardware does not work with fglrx [EPR#257839]
https://bugs.launchpad.net/bugs/284408
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