Darko: livecd "install" menu option works, while the "Try Ubuntu without
installing" menu option does not (as it goes via GDM). However, if you
need to use the livecd desktop environment, simply choose cancel when
the installation starts.

Aaron: You should try newer or older packages of GDM and/or the
radeonhd/ati driver, as the problem is related to them.

-- 
karmic release candidate restarts computer when starting
https://bugs.launchpad.net/bugs/458676
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