Hope this helps in some way.

DELL Inspiron 6400/E1505 with ATI Mobility Radeon X1400 (M54)
Cannot use Binary fglrx since Catalyst 9.3 (the last version to support my 
x1400) is incompatible with Xorg server 1.6 or later (Ubuntu 9.04 and later)
Using Ubuntu 9.10 64-bit with default open source ati/radeon drivers. No 
changes made to xorg.conf (I don't even have one :)
Video playback (mplayer, vlc) shows horrible tearing when any sort of 
compositing is turned on. (Tried with compiz, metacity compositing and also in 
xfce).
Without compositing video playback is smooth and perfect.

BUT!

if I turn on kernel mode setting by adding radeon.modeset=1 to the
kernel line or in /etc/default/grub. I have super smooth, no tears,
perfect video playback even with compositing and all sorts of 3D effects
turned on !!!!!

I discovered this when I installed fedora12 (which has KMS turned on by
default for ATI cards).

-- 
Can't VSYNC properly on ATI (Mobility Radeon HD 2600 XT)
https://bugs.launchpad.net/bugs/214154
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