compiz-kde/intel: no stencil buffer error

Binary package hint: compiz-core

Can't seem to run compiz with KDE. No matter what I've tried I always endup with the output below.
---- compiz output.
compiz.real: No stencil buffer. Clipping of transformed windows is not going to be correct when screen is transformed.
compiz.real: Couldn't load plugin 'decorator'
compiz.real: Couldn't load plugin 'state'
compiz.real: Failed to load slide: /usr/share/gdm/themes/Human/ubuntu

- And I am left without any windows decorators, plus all open applications are moved to desktop 1.

The system is a Thinkpad T60, Core 2 duo, 2GHz/1.5GB RAM and Intel integrated graphics and I am running Feisty.

I've added as much details as I could think of below. Most of the xorg.conf Options lines below were picked up while googling the problem. They don't make much difference. In particular, the Xorg.0.log reports that RenderAccel, AllowGLXWithComposite, AddRGBGLXVisuals, DisableGLXRootClipping are not used. I have no idea whether or not that is significant.

---- lspci output ----
00:00.0 Host bridge: Intel Corporation Mobile 945GM/PM/GMS/940GML and 945GT Express Memory Controller Hub (rev 03)
00:02.0 VGA compatible controller: Intel Corporation Mobile 945GM/GMS/940GML Express Integrated Graphics Controller (rev 03)
00:02.1 Display controller: Intel Corporation Mobile 945GM/GMS/940GML Express Integrated Graphics Controller (rev 03)

---- xorg.conf Options enabled ----
Section "Device"
        Option "DRI" "true"
        Option "XAANoOffscreenPixmaps" "true"
        Option "RenderAccel" "true"
        Option "AllowGLXWithComposite" "true"

Section "Monitor"
        Option "DPMS"

Section "Screen"
        Option "AddARGBGLXVisuals" "true"
        Option "DisableGLXRootClipping" "true"

Section "Extensions"
        Option "Composite" "Enable"

---- compiz startup command ----
#! /bin/bash
LIBGL_ALWAYS_INDIRECT=1 compiz.real --replace --no-fbo --indirect-rendering decorator state wobbly fade minimize cube rotate zoom scale move resize place switcher &
kde-window-decorator --replace &

---- installed packages ----
compiz-kde
compiz-core
compiz-plugins

---- glxinfo output ----
    GLX_ARB_multisample, GLX_EXT_import_context, GLX_EXT_texture_from_pixmap,
    GLX_SGIX_visual_select_group, GLX_EXT_texture_from_pixmap