I have the same issue as shown in the initial screenshot (that of May 2009) -- 
with the red bars everywhere, running Karmic with everything updated, standard 
intel drivers: Version: 2:2.9.0-1ubuntu2 on a VGA compatible controller: Intel 
Corporation Mobile GM965 aka X3100.
Although I must say that blur initially works fine (setting the blur filter to 
Gaussian, with compiz-default Gaussian radius to 3), but fooling around with 
the radius setting eventually produces these errors (including a complete 
system lockup).

-- 
[i965] Compiz blur plugin causes screen garbage (UXA bug)
https://bugs.launchpad.net/bugs/363174
You received this bug notification because you are a member of Ubuntu-X,
which is the registrant for xf86-video-intel.

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