While this is well reported I just wanted to note I experience the exact
same behaviour in Gutsy using the Xubuntu live disk.  Re-enabling the
onboard and switching over seems to be the only solution. The
installation halts and will not even allow switching over to another
terminal so it is impossible to edit the xorg.conf.

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X incorrectly defaults to using disabled Intel onboard graphics card instead of 
nVidia FX5500 PCI card
https://bugs.launchpad.net/bugs/103223
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