I started retracing my steps with regards to settings I had changed
since upgrading to Gutsy, and this change fixed the problem:

Section "Extensions"
   Option "Composite" "Enable"
EndSection


I changed this to:

Section "Extensions"
   Option "Composite" "Disable"
EndSection

And the weird nedit problem went away.  I had enabled the composite
option while messing around with compiz stuff (couldn't quite get it
working).  Apparantly even having the "Composite" option enabled in the
Xserver causes some weird problems.

-- 
Visual artifacts when "scrolling up" on networked 'nedit' window
https://bugs.launchpad.net/bugs/158355
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