I can confirm that removing splash (or in my case, changing "splash" to
"nosplash") works around the problem, as does using "nomodeset". This is
on the latest Xubuntu daily live amd64 image, from USB, nvidia GT216.
Don't think it's been mentioned before, nouveau throws a dmesg about GPU
lockup when I switch to a TTY and try running "startx". Also, apport
reports an Xorg crash once the desktop appears (at least when I boot
using "nosplash"). Might be related.

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https://bugs.launchpad.net/bugs/1043518

Title:
  live cd is unusable due to video degradation with the splash boot
  option enabled

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