after more investigation i found that i could do the following
get to console 1  via  CNTL-ALT + 1
login as normal user not root
execute  sudo  gdm
gdm starts up
switch to console 7
login as same normal user
get gold screen with white mouse cursor

then

CNTL+ATL + 2  
login as normal user
execute  sudo  gnome-session
gnome-session starts

switch to console 7
gnome window is displayed 
with applications, places system etc.

all features work but any logout and relogin 
kills gnome-session and I have to manually
restart it from console 2 (or any other console
other than 7) for thing to work again.

an abbreviated method that also worked
boot normally
try to login
get gold screen wth mouse cursor
CNTL+ALT + 1
login as normal user
export DISPLAY=:0.0
sudo gnome-session

switch to console 7 
message 'session running as privileged user'
continue  quit
select continue
after  a bit gnome-session is up

-- 
gdm fails to start after login hardy
https://bugs.launchpad.net/bugs/179628
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Desktop Bugs, which is a bug contact for gdm in ubuntu.

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