The following link
http://tsdgeos.blogspot.com/2008/04/fglrx-blocking-xorg-on-logout.html
identified a problem with the  file /etc/ati/authatieventsd.sh.

The suggestion is to update the change by changing

XDM_AUTH_MASK=/var/lib/xdm/authdir/authfiles/A$1*

to:

XDM_AUTH_MASK=/var/run/xauth/A$1*

This solution worked for me.

-- 
Freeze on KDE logout
https://bugs.launchpad.net/bugs/220102
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