I can confirm this problem, I also have an Nvidia (5700 GO) and when enabling 
the effects the window manager does not work. Compiz however works fine (the 
switcher and cube do work).
When I try manually to run 'compiz --replace' and 'gtk-window-decorator 
--replace', compiz also works but gtk-window-decorator just does nothing. When 
try to run it through gdb (file gtk-window-decorator, start --replace) I don't 
get any useful output either.
Beryl did work with the same nvidia driver and xorg.conf on edgy.

-- 
enabled desktop effects window decoration
https://launchpad.net/bugs/73544

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