I am using Kubuntu Gutsy, had this issue off and on for two versions or so, it 
only seemed to occur when I downloaded the latest ATI drivers, vice using from 
repository.  
I physically verified the new path existed before replacing the XDM_AUTH_MASK 
line.  After replacement my issue was solved.  Tested on Loggoff, Shutdown, 
Restart, and X-server restart CTRL-ALT-BACKSPACE--all functional.

I was wondering if someone is going to push this issue and the proposed
solution upstream to ATI for permanent fix.

Also the first line bug description needs to be changed to include all
affected versions, that way folks know immediately that they are in the
right spot:

"Using Feisty, Gnome and GDM:"

--to--

"Using Feisty, Gutsy, Hardy--Ubuntu and Kubuntu:"

-- 
[fglrx] freezes upon Logout or Switch user [patch]
https://bugs.launchpad.net/bugs/118605
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