Sorry, my mistake.
The driver is alright.
It detects the card and displays the message "AGP Card Detected". But after 
that it checks if it is a from RS400 family and corrects it to CARD_PCI, but 
does not display any message regarding this change.

The DRI was not starting due to the KMS.
By adding radeon.modeset=0 while booting, the DRI started up fine.

But I would suggest the developers to display a message "PCI Card forced
for RS400 family" when the checking for RS400 is done.

Is there any disadvantage of setting radeon.modeset=0.

Due to this problem, the graphics are not working in Live CD. Anyway to
fix this?

-- 
[RC410] detects AGP on a PCIE card
https://bugs.launchpad.net/bugs/475466
You received this bug notification because you are a member of Ubuntu-X,
which is the registrant for xserver-xorg-driver-ati.

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