Just tried the 11.10 beta-2 installation, and that exhibits the same
problem.

Work is being done in this area though.  The screen shot in
https://bugs.launchpad.net/ubuntu/+source/compiz/+bug/830949 is nearly
identical to what I sometimes see.

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https://bugs.launchpad.net/bugs/850763

Title:
  [Intel 945GM/GMS] Plugging in external display results in garbled
  screen

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