I was going to post this by itself but since you also are having a 7.4.x radeon problem I will add my experience here:
Using a Gateway 450ROG, Pentium M, RV200/M7 Mobility Radeon 7500, here is dmesg:
[ 20.754032] [drm] radeon kernel modesetting enabled.
[ 20.755912] [drm] initializing kernel modesetting (RV200 0x1002:0x4C57 0x107B:0x0450).
[ 20.755935] [drm] register mmio base: 0xD0100000
[ 20.755938] [drm] register mmio size: 65536
[ 20.764056] agpgart-intel 0000:00:00.0: AGP 2.0 bridge
[ 20.764070] agpgart-intel 0000:00:00.0: putting AGP V2 device into 4x mode
[ 20.764109] radeon 0000:01:00.0: putting AGP V2 device into 4x mode
[ 20.764139] radeon 0000:01:00.0: GTT: 256M 0xE0000000 - 0xEFFFFFFF
[ 20.764150] radeon
0000:01:00.0: VRAM: 128M 0x00000000D8000000 - 0x00000000DFFFFFFF (32M used)
[ 20.766763] [drm] Detected VRAM RAM=128M, BAR=128M
[ 20.766770] [drm] RAM width 64bits DDR
[ 20.766872] [TTM] Zone kernel: Available graphics memory: 440458 kiB
[ 20.766875] [TTM] Zone highmem: Available graphics memory: 1034094 kiB
[ 20.766878] [TTM] Initializing pool allocator
[ 20.766889] [TTM] Initializing DMA pool allocator
[ 20.766933] [drm] radeon: 32M of VRAM memory ready
[ 20.766936] [drm] radeon: 256M of GTT memory ready.
[ 20.768209] radeon 0000:01:00.0: WB disabled
[ 20.768221] radeon 0000:01:00.0: fence driver on ring 0 use gpu addr
0x00000000e0000000 and cpu addr 0xf8030000
[ 20.768227] [drm] Supports vblank timestamp caching Rev 2 (21.10.2013).
[ 20.768229] [drm] Driver supports precise vblank timestamp query.
[ 20.768249] [drm] radeon: irq initialized.
[ 20.768283] [drm] Loading R100 Microcode
[ 20.862293] [drm] radeon: ring at 0x00000000E0001000
[ 20.862324] [drm] ring test succeeded in 1 usecs
[ 20.862531] [drm] ib test succeeded in 0 usecs
[ 20.864400] [drm] Panel ID String: Samsung LTN150P1-L02
[ 20.864404] [drm] Panel Size 1400x1050
[ 20.864477] [drm] No TV DAC info found in BIOS
[ 20.885891] [drm]
radeon legacy LVDS backlight initialized
[ 20.885895] [drm] Radeon Display Connectors
[ 20.885898] [drm] Connector 0:
[ 20.885900] [drm] VGA-1
[ 20.885904] [drm] DDC: 0x60 0x60 0x60 0x60 0x60 0x60 0x60 0x60
[ 20.885907] [drm] Encoders:
[ 20.885909] [drm] CRT1: INTERNAL_DAC1
[ 20.885912] [drm] Connector 1:
[ 20.885914] [drm] LVDS-1
[ 20.885916] [drm] Encoders:
[ 20.885918] [drm] LCD1: INTERNAL_LVDS
[ 20.885920] [drm] Connector 2:
[ 20.885923] [drm]
SVIDEO-1
[ 20.885925] [drm] Encoders:
[ 20.885927] [drm] TV1: INTERNAL_DAC2
[ 20.920569] [drm] fb mappable at 0xD8040000
[ 20.920572] [drm] vram apper at 0xD8000000
[ 20.920575] [drm] size 1478656
[ 20.920577] [drm] fb depth is 8
[ 20.920579] [drm] pitch is 1408
[ 20.921009] fbcon: radeondrmfb (fb0) is primary device
[ 20.966193] Console: switching to colour frame buffer device 175x65
[ 20.975804] radeon 0000:01:00.0: fb0: radeondrmfb frame buffer device
[ 20.975808] radeon 0000:01:00.0: registered panic notifier
[ 20.983418] [drm] Initialized radeon 2.39.0 20080528 for 0000:01:00.0 on minor 0
When booting 'knoppix' it boots to the electrosmog background for a second and then garbage with mouse cursor
if I boot 'knoppix desktop=kde' it is ok, but when waking from sleep (after killing kded4, see other message) I just get the mouse pointer.
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Ok, well in testing I found a solution you can try, it worked for me, use the cheatcode no3d when booting:
knoppix no3d
Even waking from KDE works (but I still have to 'kill' kded4 first)
So this looks like a Compiz/3D problem, for now,
s7r: Please try this on your machine so we know for sure