I use Ubuntu since 2005 and recently also see rendering problems with my
ATI X600 and others like X1200. But I never saw problems like your
screenshots. I recommend you to create a new Ubuntu bug report (by
executing "ubuntu-bug" in a terminal) or directly upstream on
https://bugs.freedesktop.org where the graphics system is hosted.

Meanwhile you could try to:
- boot with the kernel option "nomodeset" (press F6 on boot menu screen)
- login with "Ubuntu classic (without effects)", or uninstall Compiz effects 
completely by executing "sudo apt-get remove compiz-core" in a terminal
- downgrade to the latest Long Term Support release "Ubuntu 10.04 LTS"

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https://bugs.launchpad.net/bugs/556782

Title:
  [rs690m] Graphics corruption with ati x1200

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