I've noticed a few threads about SL not starting under Ubuntu with an ATI video card. I think I've found a solution, at least with 7.10 Gutsy:
(Sorry if this solution has already been posted, I looked but did not find.)
The problem is a missing composite layer.
First I upgraded the "restricted" driver with the latest from ATI's site:
http://ati.amd.com/support/driver.html
Second thing I did was edit the xorg.conf and force it to have a composite layer. It's usually the last section of the conf, called "Extensions".
Run the GUI editor as a superuser:
gksudo gedit /etc/X11/xorg.conf
You'll find the following:
Section "Extensions"
Option "Composite" "0"
EndSection
Change it to:
Section "Extensions"
Option "Composite" "1"
EndSection
Save the file and close the editor.
This may be enough, give it a try. If it still won't work, then try this:
sudo apt-get install xserver-xgl
then restart X with "ctrl-alt-backspace".
This worked for me on an Acer TravelMate with an ATI Mobility Radeon X1400. I'm not anything like an expert with Linux, I've only just begun using Ubuntu, in fact, about a month ago. So, grain of salt and no warranties =^_^=