The workaround / fix can be found here:

http://ubuntuforums.org/showthread.php?p=6315676#post6315676

This is an issue caused by the combo of trying to load the cx18 and
nividia drivers at the same time -- memory issues for which adding the
vmalloc specification to GRUB for the kernel you're trying to load will
do the trick.

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Solution Found: Failed to Initiate NVIDIA graphics device on Intrepid Ibex
https://bugs.launchpad.net/bugs/288626
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