For those looking for a quick solution Temüjin's comment sums it up and did the trick--at least for us.
Here's what's happened: a co-worker updated her machine from 9.04 to 9.10 and after that the screen was only flickering after X started. I am by no means a Linux guru but following the impressions I got from the forums we tried to uninstall the proprietary driver and install the open source... but obviously bits and pieces were scattered/left around. Eventually we managed to launch X in low resolution mode but that was it--pretty much where amigammon got:
Reason + solution summed up in a few lines (thank you Temüjin):
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