Same here. It does work if I use the binary driver, but I've never had
any problems before with the opensource one.

Seen lots of bugs about X300 causing crashes etc, so I can understand
why its disabled. However it would be nice if it told you the reason why
(rather than turning on effects failed - this could mean anything), and
maybe gave you the option to turn it on anyway (at your own risk).

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compiz disabled on radeon laptops
https://bugs.launchpad.net/bugs/204945
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