Comment 26 for bug 108578

Now it also worked for me, but I did something different.

I had a faint recollection of using envy to install the nvidia binary drivers, but had later used the driver coming as a "restricted" ubuntu package.
In an attempt to reverse the process, I removed linux-restricted-modules-2.6.20-15-386 and nvidia-glx, installed envy, used envy to install the driver, then remove it again, and installed linux-restricted-modules-2.6.20-15-386 and nvidia-glx again. All in one go, without rebooting or restarting X.

And it worked. I rebooted a few times, and it's fine now.