Comment #23 Solved my problem too.  since I had ubuntu already installed I just 
logged into a recovery prompted and dropped to a root shell and ran aticonfig 
--initial (i had already installed the fglrx driver yesterday when I logged in 
using limited graphics)
I hope this helps.

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[lucid] ATI hd5xxx cards wrongly doing kms?
https://bugs.launchpad.net/bugs/560306
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