xserver-xgl searches/detects wrong graphics card

Binary package hint: xserver-xgl

I have installed xserver-xgl version 1:1.1.99.1~git20070727-ubuntu3 on a fresh Hardy Heron Alpha 2 install with all updates until 02-01-08. My hardware is a Dell Inspiron 6400 Dual Core with a Ati x1500 graphics card. Kernel version is 2.6.24-2-generic. When installing xserver-xgl I reboot and when I try to login nothing happens. I just get the ubuntu color background with an arrow. When I view my .xsession-errors file it lists the following:

(process:5926): Gtk-WARNING **: This process is currently running setuid or setgid.
This is not a supported use of GTK+. You must create a helper
program instead. For further details, see:

    http://www.gtk.org/setuid.html

Refusing to initialize GTK+.

(process:5930): Gtk-WARNING **: This process is currently running setuid or setgid.
This is not a supported use of GTK+. You must create a helper
program instead. For further details, see:

    http://www.gtk.org/setuid.html

Refusing to initialize GTK+.
/etc/gdm/Xsession: Beginning session setup...
Checking for nVidia: not present.
Starting Xgl with options: -accel xv:pbuffer -accel glx:pbuffer -nolisten tcp -fullscreen -br +xinerama
xmodmap: unable to open display ':1'

I have read from other bugs that the setuid error does not affect the session. A strange thing is that it says "Checking for nVidia: not present." while it should be looking for fglrx. My xorg.conf has the fglrx driver and there is no nv modules or driver loaded.

Any ideas??