Do you have compiz/beryl desktop effects enabled? If so disable them in Preferences->Appearances->Visual Effects.
Fixed the problem for me with a 4850 mobility in my GT725, sucks, but ATI drivers blow hard for linux as in an advert for nVidia. I still get lockups when playing back video after awaking from sleep though.
As to the error, yeah I still see that in my logs as well, but it doesn't seem to cause any problems AFAIK, and turning off the desktop effects did the trick for me.
At the time of the problem (and now) I never had a second machine to attempt to ssh in with, so I can't verify if the system was still up here w/X locked. But, have you tried killing the X server process, and then re-starting X?
(Not much of a solution for me anyways even if it works as the entire point of a notebook is to have a single mobile platform which generally implies no other machine capable of sshing to effect the workaround.)