Using Aarons workaround i.e. running: "compiz --use-root-window --replace &"
solves the problem for me on lucid 64 bit with a nvidia 8500 GT card and 
current driver 195.36.15

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