I have solved my problem.
Deleting /etc/ati and reinstalling the ati driver did not help. although the 
/etc/ati directory got created, there was nothing in it.
swapping hard disks, creating a clean install of Ubuntu, updating & installing 
the hardware driver, then copying amdpcsdb and amdpcsdb.default to the /etc/ati 
directory of the old hard drive, got something that would boot and work, but 
with that annoying AMD testing use only bug in the lower right hand corner.

uninstalling the hardware driver, copying the entire /etc/ati from the
clean install then re-installing the hardware driver FINALLY got me a
working system.

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fglrx fails at startup because of missing  amdpcsdb.default + removal leaves 
bad settings in Xorg.conf
https://bugs.launchpad.net/bugs/440233
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