Comment 126 for bug 642518

x-swat driver is not ready to be used for the ati card at this time. find a point that works and stick with it for now..
Ive got x-swat disabled for now.

Your mobility ati could be another issue that the Ubuntu team need to deal with if the 2:8.723.1-0ubuntu4 driver is working and glx gears is showing 4k much better then what i was getting i was showing 350fps after the 8.723 with no issues then after the 8.78 driver update it went 10-15kfps every 5 seconds.but that could be the dirrence in the computers with mobility and full scale card.

if your hitting a brick wall after the 8.78 update leave it at the 8.723 for now till they get the issue resolved..

I didnt hit the black screen till i updated to the x-swat driver and i had to fix it by doing everything rescue dropped to root prompt with networking. that was a pain but at least i got it straight. One thing to attempt still is purge the repo drivers then install the x-swat to see if it works post 14 will not update after this error is developed infact your lucky to get anything to work till the purge is done.
If you get any dependacy issues then
sudo apt-get install
after the dendancy notice is given and it will backtrace to whats needed and install it from what ive seen once already.
Also if your useing kdm and kde4.5 32bit your gonna have problems im not sure what OP SYS youre useing if your on lucid ubuntu then there again could be the diffrence of Mobility and Standard gpu

Any of the dev team checked the 2:8.78 -0ubuntu5 driver on a mobility gpu yet?
Im not a developer but i do like troubleshooting and see what works i just dont have a mobility laptop to test with mines an intell :-/ machine