I just upgraded to Ubuntu Hardy and found myself in the same situation.
After I logout my computer freezes and my only way out is a hard reset.
Things that I have done include:

1. Booted Hardy with the Feisty kernel. No changes.
2. Created a brand new user and tried login in and out. No changes.
3. Modified my xorg.conf file to force X to use the VESA driver ... success, no 
more freezes after logout.

Of course with this last option I get a sub-optimal desktop but this
makes me conclude that the problem is X-related. My first call would
have been to blame the new Intel driver in xorg since I have an ASUS
P5E-VM mother board with the Intel G35 (3500) chipset. But several
people report the same problem with non-Intel chipsets/boards so the
problem is probably deeper than that, but definitevely X-related.

-- 
Logout proces hangs
https://bugs.launchpad.net/bugs/38915
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