Found something - the desktop had been randomly hanging every now and
then so I tried uninstalling the NVidia version 180 closed source driver
and the System->Preferences->Screensaver window now behaves normally.
Unfortunately, the display is low resolution and looks crappy but if I
have to, I will take this over the hang.

This is essentially the same root cause of another bug I filed where Evolution 
would hang on launch and sometimes corrupt the display.  It also went away when 
I deleted the NVidia driver.
https://bugs.launchpad.net/ubuntu/+bug/333271 

I am going to try with the older version 173 driver and see if it is as
problematic.  The version 180 driver is buggy to the point of being
unusable.

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Jaunty screensaver locks up X, <CTL><ALT><BS> doesn't work
https://bugs.launchpad.net/bugs/338087
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