I resolved the issue:

For some reason when I upgraded to Lucid all the Nvidia drivers were
installed so they were loading with each bootup and then basically
crashing. So the solution was to completely uninstall all Nvidia
packages, reboot the system and EUREKA  – now Desktop Effects work 100%.

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LUCID COMPIZ: can't enable Desktop Effects..!
https://bugs.launchpad.net/bugs/541641
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