I've had the same problem.  My work around was to drop to tty from the
login prompt (clicking the login window corrupted and froze the system)
and then remove the current nvidia drivers:

sudo apt-get purge nvidia-glx-*

Install the latest:

sudo apt-get install nvidia-glx-185

and then run nvidia xconfig

nvidia-xconfig

After a reboot everything worked.

-- 
Corrupt graphics on boot with 7800GT/nv
https://bugs.launchpad.net/bugs/62230
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which is subscribed to xserver-xorg-video-nv in ubuntu.

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