Thanks,

good constructive advice and thorough walkthrough, which I followed
perfectly - but still 'desktop effects could not be enabled'.

I followed pts [1-6], hurried to enable desktop effects after reboot,
upon which the Download and Install dialog re-appears, runs and the
notorious popup says 'desktop effects could not be enabled'.

Bug is alive and kicking, as far as I'm concerned.

I attach new Xorg.0.log, as per your #7

** Attachment added: "Xorg.0.log.bak"
   http://launchpadlibrarian.net/19356390/Xorg.0.log.bak

-- 
fglrx - gutsy - ati: Black Screen with ATI RV535 [Radeon X1650 Series] 
[1002:71c7]
https://bugs.launchpad.net/bugs/146515
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