Laptop is still running, but I'm getting the "reserve failed for wait"
messages also.

Following Jamie's comment, I tried the guest session, and it's now
working for me also.

-- 
[lucid] desktop runs out of video memory on ATI Radeon Mobility 7500
https://bugs.launchpad.net/bugs/507148
You received this bug notification because you are a member of Ubuntu-X,
which is the registrant for xserver-xorg-driver-ati.

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