Doh, I've only just realised that you said you manually installed the nvidia 
drivers at some point in the past:
"Actually even vanilla Nvidia driver from nvidia installer does not load with 
-15. Manually running modprobe nvidia gives FATAL: could not run install 
command for module or such." I wish I'd spotted this sooner because as soon as 
you go the manual route any problems that arise may be beyond Ubuntu's control 
and you are better off reporting issues to NVIDIA via 
http://www.nvnews.net/vbulletin/forumdisplay.php?f=14 .

The fact that the lowlatency kernel works but the regular kernel doesn't 
suggests the manual binary driver install has overwritten/created a kernel 
module that interferes with the default Ubuntu provided kernel module. If the X 
server works with the binary driver after doing:
rmmod nvidia
modprobe nvidia_new
Then that will confirm the problem and there might be a way to use the default 
Ubuntu modules again.

-- 
2.6.20-15-generic breaks X when using NVIDIA-glx drivers
https://bugs.launchpad.net/bugs/106434
You received this bug notification because you are a member of Ubuntu
Bugs, which is the bug contact for Ubuntu.

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