Thanks for reporting this issue.
Could you please attach the /var/log/Xorg.0.log file from an instance
where the Feisty CD is freezing with the error screen?
** Changed in: xorg (Ubuntu)
Importance: Undecided => Medium
Status: Confirmed => Needs Info
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[feisty beta] X.org doesn't work in "Desktop" CD
https://bugs.launchpad.net/bugs/103099
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