Comment 11 for bug 474134

Same here, IBM T43 upgraded from Jaunty to Karmic (xfce4), system monitor, notify-osd and gnome do are blurred.
See also http://ubuntuforums.org/showthread.php?t=1285406
I reinstalled Gnome, but still the same (I kept my home folder on a separate partition).
I created a new user which had not this problem.
Back to first user, I turned effects on to normal (effects where turned off), it finally worked.
I installed xfce4 and logged into it, back the problem.
So for me, now in Gnome it works fine, but on xfce4 it's still blurred.

So as it works fine for second user, I guess there's a config file which does nasty things.