Comment 8 for bug 440608

That worked like a charm! Thanks, foureyesboy!

I'm reassigning this to xorg-xserver-video-ati.

Let me summarize a bit. Folks running Ubuntu on laptops with Radeon Mobility 7500s starting with Ubuntu 9.10 have seen gnome-system-monitor, gnome-do, and notifications appear as black and white stripes, or, as I described it, "static."
Starting Emerald or xcompmgr in Fluxbox turned the entire desktop into the famous "static" for me. Turning desktop effects to Normal has worked for some. Modifying the xorg.conf as foureyesboy has above has worked for foureyesboy and myself.
For more info, check out this thread on UbuntuForums: http://ubuntuforums.org/showthread.php?p=8278160