I verify that Ubuntu 8.10 hangs for this specific desktop computer.

Apparently the issue is with the graphics driver and not gnome-panel.

The workaround is shown at
http://ubuntuforums.org/showpost.php?p=6931910&postcount=6
which effectively disables the default 3D desktop features. Then, the system 
works.
I have not tried with 9.04 yet.

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2.26.27-4 hangs at gnome-panel on Compaq D51S
https://bugs.launchpad.net/bugs/273452
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