Updating ubuntu fixed the problem for me.
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Cannot enable compiz with the fglrx driver (ATI X1600)
https://bugs.launchpad.net/bugs/221977
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desktop-bugs
Public bug reported:
Binary package hint: gnome-control-center
Clicking Normal or Extra in the Visual Effects settings on gnome-
appearance-properties yields the error message Enable driver?.
But: Running compiz --replace enables effects.
Restricted drivers manager says In use but not Enabled.