Exactly the same problem on ATI FirgGL R520GL (V7200).

The problem is triggered by opening an xterm window in a plain old Gnome
session.

I've tried a few different version of flgrx dirvers non of them worked.  The 
driver downloaded
from the ATI web site doesn't lock-up, but the screen goes an white/gray and 
nothing
else is possible.  Killing the X-server at this point with Atl-Ctrl-Backspaced 
flashed the
background and the then GDM comes up. 

Right now, using radeonhd to get around this issue, but there are some 
artifacts on the
display that are driving me nuts.

All in all, the system is completely unusable under Gnome.

-- 
[fglrx] fglrx freezes randomly : Soft lockup
https://bugs.launchpad.net/bugs/211610
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