I can add Option "AccelMethod" "XAA" to make my device section look like
this:

Section "Device"
 Identifier "Configured Video Device"
 Driver "ati"
 Option "AccelMethod" "XAA"
 Option "DRI" "off"
EndSection

Now at the login screen, the text entry box looks normal (white
background), the "Password" text above the entry box gets updated after
I enter my user name. The first Issue I see on login is that as the top
and bottom panels pan in, their animation is "messed up." Dragging
windows around has varying results, always bad. Generally, window
content either disappears when I drag or scroll in a window. I can
normally get the content to be redrawn by clicking once on the top of
the window frame. See attached picture of an example of me dragging a
window around the desktop (desktop panel issues are also shown here).

** Attachment added: "windowDrag"
   http://launchpadlibrarian.net/23884303/Screenshot.png

-- 
severe display corruption
https://bugs.launchpad.net/bugs/342899
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