This is quite an old bug indeed. 
The system in question was upgraded to ubuntu 13.04 or 13.10 (don't remember 
exactly) which resulted in a black screen when X was supposed to have started 
and an unusable system. I did not investigate this deeply but instead did a 
fresh install of Xubuntu 13.10, which worked without problems. In the fresh 
install the default video driver setup works out of the box, with the only 
problem that 3d accelleration is not supported (but that's a known problem I 
guess). (Note: running ubuntu 13.10 from a live usb environment also appeared 
to work out of the box, although it was as expected very slow.) 

So this bug can be closed as far as I'm concerned.

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https://bugs.launchpad.net/bugs/880882

Title:
  X starts with garbled screen, restarting X from cli fixes

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