@DarthBrady: this has already been confirmed (over, and over, and over again). 
Try the workaround in 
https://bugs.launchpad.net/ubuntu/+source/xorg-server/+bug/353126/comments/60
Works for me (albeit slow).

@nhasian: have you tried in lucid (current as of Feb 10, 2010? I did and
I still have to use the above. Do you have different results?

-- 
Compiz / vnc screen refresh with nvidia-restricted driver/VirtualBox/ATI fglrx 
driver using X.org prior to release 7.5
https://bugs.launchpad.net/bugs/353126
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