I'm a little bit at loss, since you cannot reproduce this with a LiveCD. The 
only things I can think of are:
- Create a new user and log in as this user. If this works it indicates that 
there are some of your user settings (e.g. in ~/.config) that triggers the 
problem.
- With the intrepid LiveCD, try upgrading some individual packages that may be 
related. You can't do a `apt-get upgrade` because it will not be memory enough 
to store all the new installed packages. Upgrading individual packages can be 
done with `apt-get install pkg-name` if I remember correctrly.
- Reinstall Intrepid from scratch. First test before you upgrade any packages. 
If it works, but stops working after an upgrade some of the upgrades probably 
did it. 

I think that realistically, this can only be fixed in intrepid if you
are able to pinpoint the exact package upgrade that triggers this
problem. Then those changes may  be reverted (subject to pro/con
analysis). For Jaunty, it seems to not be a problem any more, which is a
good thing (although it can be a bit dissatisfying for a bug reporter)
:-)

Thank you for including lots of information promtlly for this bug.

** Changed in: xserver-xorg-video-intel (Ubuntu)
       Status: Incomplete => Confirmed

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[i965] black screen on compiz startup on dell 1420 w/ intel GM965
https://bugs.launchpad.net/bugs/318294
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