Comment 9 for bug 495553

Yes, it's likely to be an xorg issue. The driver is xserver-xorg-video-openchrome,
dpkg -s xserver-xorg-video-openchrome
Package: xserver-xorg-video-openchrome
Status: install ok installed
Priority: optional
Section: x11
Installed-Size: 556
Maintainer: Ubuntu X-SWAT <email address hidden>
Architecture: i386
Version: 1:0.2.904+svn812-1ubuntu1
Replaces: libchromexvmc1, libchromexvmcpro1
Provides: xserver-xorg-video-6
Depends: libc6 (>= 2.4), libdrm2 (>= 2.3.1), libx11-6, libxext6, libxv1, libxvmc1, xserver-xorg-core (>= 2:1.6.99.900)
Conflicts: libchromexvmc1, libchromexvmcpro1
Description: X.Org X server -- VIA display driver

When the resolution is 1024x768, the desktop appears as in the photo whether or not there is an xorg.conf file installed. The principal difference is whether or not the hardware cursor is enabled. With no xorg.conf disabling the hardware cursor, the cursor moves from the extreme left to the extreme right of the screen; in other words its range is not the same as the virtual X position of other objects on the screen. This applies to both the login window, and to the desktop after logging in.

If the hardware cursor is disabled in xorg.conf, then the cursor position coordinates are the same as the rest of the screen - shifted half a screen width from the left edge of the screen, with the right side of the screen wrapped to the left.

If resolutions other than 1024x768, such as 800x600, 640x480, etc, then the X origin is shifted to some position other than the center of the screen.