Comment 5 for bug 359030

You can try this guide, install 2D drivers from ppa and folow 3D guide
http://ubuntuforums.org/archive/index.php/t-1046504.html
then, compile and install(same way as nouveau_dri.so) libtxc_dxtn
http://homepage.hispeed.ch/rscheidegger/dri_experimental/s3tc_index.html
For me 8600GT it is working :)