I faced the same problem here and solved by using vesa or fglrx drivers while 
disabling AIGLX.
xorg.0.log and xorg.conf are attached. 

** Attachment added: "xorg.conf"
   http://launchpadlibrarian.net/11068388/xorg.conf

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ATI X display : KDE screen 640x480 in top-left corner of a 1280x1024 screen
https://bugs.launchpad.net/bugs/158962
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