I've playing Diablo on my Lenovo W500 (with a Radeon HD 3650 and Catalyst 12.4 driver). After installing this driver the system hangs after logging in to the game and I must do a hard reset. I'll do more testing later to make sure the problem persists, but the only change was that I installed the new drivers. For this reason (and the dumb screen overlay) I'll very likely be reverting to the old driver version.
Looks like the driver is working now for playing Diablo... not sure why it didn't work to begin with. I did re-run the following command (but I didn't see any obvious changes with the xorg.conf):