Hi,
It looks like I have the same issue. But, I have it under control with a quite 
little workaround.
The problem suddenly appears when I installed privative NVidia drivers and 
after executed nvidia-xconfig.
Until that I have lucid working without any issue (apparently), except, 
obviusly, the resolution screen which it was 1024x768.
I got the suggestion to use privative drivers and I tried. After activation, 
the system asks for a restart and I restarted.
The system restart and when the login screen appears it was at (1600x1200). I 
thougth... Great!!!!!!
I selected my used and... The system goes freeze!!! 
- The box for password appears and the cursor is inside but it does not blink
- I try to type chars but nothin happens
- The mouse cursor is freeze also

After a few seconds, the display looks restarted and it asks again to
select the user. If I select the user, the problem happens.

Workaround:
- Open a console (Ctrl+Alt+F1, for example).
- login on the console
- Copy the /etc/X11/xorg.conf file to a "backup" folder to analyze on future
- Remove the /etc/X11/xorg.conf (sudo rm /etc/X11/xorg.conf)
- Restart gdm (sudo /etc/init.d/gdm restart)

Now the system restart with the 1024x768 resolution... but it is working
and I will wait for a solution for this wait

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pam_unix(gdm:auth): conversation failed
https://bugs.launchpad.net/bugs/516520
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