i have installed gutsy on my t61p without a problem.
but i have used the alternate CD and after reboot i have alterned the xorg.conf 
by:
going into a new console <CTRL>+<ALT>+F2 login into the system then
nano /etc/X11/xorg.conf and changing the default driver from vesa to nv.

later from gnome i installed nvidia proprietary.

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Ubuntu 7.10 fails to install on ThinkPad T61p
https://bugs.launchpad.net/bugs/183582
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