I just made a fresh install of Gusty (v7.10) to a nw8240 laptop.  The
GUI started by the Live CD had the wobbly windows distortion mentioned
above, but the text was still readable enough to complete installation.

Taking a cue from this thread in Ubuntu Forums...
http://ubuntuforums.org/showthread.php?t=421797

I installed package xorg-driver-fglrx, ran the command "sudo aticonfig
--initial" and restarted the X server.  (aticonfig overwrites the
xorg.conf file to its own liking.)

The display came up fine at 1920x1200 resolution on the LCD.  No need to
manually tweak xorg.conf.  I also appear able to switch screen
resolutions just fine in System -> Preferences -> Screen Resolution.

Since I just installed Ubuntu, I'm unable yet to tell whether direct
rendering (or for that matter any HW acceleration) works with this
setup.

-- 
[X700] Really bad sync on HP NW8240
https://bugs.launchpad.net/bugs/20283
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