I now found out that the gray stripes have to do with the
"compositing_manager" option under /apps/metacity/general . When
enabled, I see the gray stripes. When disabled, I see my desktop but see
garbage in some apps e.g. the VLC window (might be all Qt interfaces
which fail).

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[HD 3650] cannot start gnome X in intrepid (gray screen with horizontal thin 
flashing black lines)
https://bugs.launchpad.net/bugs/272406
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