Under kernel 2.6.17-7 my nvidia card operates correctly. Both the nvidia and vesa drivers work. However on 2.6.17-8, 2.6.17-9 and 2.6.17-10 the card suffers a failure when gdm starts.
On kernels > 2.6.17-7 the system boots. usplash correctly draws the startup graphic. When gdm starts the screen appears to "flash" white and then go blank. The system is then unresponsive (as far as I can tell) to keyboard input. It will not switch to a virtual terminal, nor will the power key do an init 0 (or whatever it does for a soft shutdown). The result is that I have to do a hard shutdown (hold down power button for 5 seconds).
Currently I use the vesa driver. If I start kernel 2.6.17-7 everything works as I expect. If I choose kernels 2.6.17-8 through 2.6.17-10 this issue arises. The only configuration difference is the kernel.
The X logs do not suggest an issue. Furthermore a quick grep of messages from running 2.6.17-7 and 2.6.17-8 only shows differences where expected (such as amount of RAM freed after initrd).
If you boot without the "splash" argument, does it work?