I Actually resolved this. 
Seemes that an old installation had blacklisted nvidia-updates module from 
loading. 

After removing the blacklist from /etc/modprobe.d the nvidia driver
started working again.

The installer of the package should check if there exists an blacklist
of the module when installing, and remove this.

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https://bugs.launchpad.net/bugs/1064358

Title:
  X in failsafe mode after installing Nvidia drivers

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