Original Problem Root Cause:
I have a dell inspirion laptop with amd Radeon 7700HD, and integrated Intel 
IvyBridge.  At some point, prior to the "power-loss-induced shutdown" described 
in my previous comment. . . I believe I "played with" the switchable-graphics 
settings by using the aticonfig command, to switch from the Radeon to the 
Intel.  I made this switch, and forgot.

I was using the 12.4 version of the Catalyst driver.

Upon reboot, (in Ivybridge-mode), I encountered this system.  (logon
flashes a bunch of warning messages, including "broken pipe" - then
returns you to the login screen, no matter which window-manager is
chosen - even Unity 2d, even Gnome - no effects).

When the .Xauthority file is chowned from root, back to my regular user
account, I am able to log into Unity 2D.

(however - now I've got a new problem: I can't get the Radeon 7700 HD to
work again . . . )

I went through several cycles of uninstall and reinstall of the Catalyst
driver (including upgrade to the new 12.8 version).

I was able to reproduce the problem during BAD installs:
(when I could not build the installer package, but instead, just ran the .run 
file)
In this case - graphics is completely disabled, until I set /etc/X11/xorg.conf 
back to a failsafe vesa configuration.
. . . and then - I still have the login/return issue, until I change ownership 
of .Xauthority from root to my user.

More careful following of the install procedure on ATI's Catalyst wiki,
produced a successful installation, including the ability to log into
Unity 3D.

So the main two points I want to make:
1. The symptom reported in THIS bug, (login fails, returns you to the login 
screen). . . 
1a. . . . (is actually not related to the "broken pipe message" - that's 
something else. It is a coincidence that we can SEE this message during the 
login failure, but it is likely that this message was happening during a normal 
successful login anyway - I don't know exactly what's causing it.  But my 
system is now working fine, and I'm still able to see this message for a 
brief-flicker).
1b. . . (the symptom can be worked-around by the following command, where your 
user is "username":
sudo chown username:username ~/.Xauthority
I *do not* understand why this file is being claimed by root, but I think it 
has something to do with the Catalyst driver, and switching graphics from a 
discrete to embedded gpu, and rebooting.   I believe the "bug" may exist in 
12.8 as well.
Having .Xauthority owned by root is going to fubar the whole login process.
It may be possible to uninstall Unity and login with gdm, and the reinstall 
Unity - I didn't try that. Seems a bit extreme anyway.

2. Following the EXACT procedure (including complete removal of prior
installs, not just the fglrx, but also the xorg ati components) on the
AMD Catalyst wiki for YOUR version of Ubuntu is absolutely necessary to
get this driver to install properly.

(for 12.04 - these instructions are here:
http://wiki.cchtml.com/index.php/Ubuntu_Precise_Installation_Guide)

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https://bugs.launchpad.net/bugs/1036830

Title:
  Can't log in unless remove .Xauthority or use gdm

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