As the log says "Direct rendering experimental on RS400/Xpress 200 enabled".
Try disabling DRI with this in the Device section of xorg.conf:
Option "DRI" "off"
Try also to disable desktop effects (compiz). Maybe compiz needs to be
blacklisted on these cards.
** Changed in: xserver-xorg-video-ati (Ubuntu)
Assignee: Tormod Volden (tormodvolden) => (unassigned)
Status: Incomplete => Confirmed
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[RS480] full gnome session hangs with ATI driver and gutsy BETA
https://bugs.launchpad.net/bugs/146138
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