Install lubuntu 12.04 on an old Dell c600 : Video issues

I am trying to install lubuntu on an old laptop. I use the 386 alternate instalation of it, because it has only 256mb ... All when ok so when I start up the lubuntu the screen splits between 1024x768 and 800x600... its very horrible to use =).

Ok I do this:

lspci

and found an ATI Rage mobility M3.

01:00.0 VGA compatible controller: ATI Technologies Inc Rage Mobility M3 AGP 2x (rev 02)

So I tryied the old xorg way to edit the missing resolution, but it does not work:...

Section "Screen"
    Identifier  "Default Screen"
    Device      "ATI Technologies, Inc. Rage Mobility M3 (AGP)"
    Monitor     "Generic Monitor"
    DefaultDepth    24
    SubSection "Display"
        Depth       1
        Modes       "1024x768"
    EndSubSection
    SubSection "Display"
        Depth       4
        Modes       "1024x768"
    EndSubSection
    SubSection "Display"
        Depth       8
        Modes       "1024x768"
    EndSubSection
    SubSection "Display"
        Depth       15
        Modes       "1024x768"
    EndSubSection
    SubSection "Display"
        Depth       16
        Modes       "1024x768"
    EndSubSection
    SubSection "Display"
        Depth       24
        Modes       "1024x768"
    EndSubSection
EndSection

on an brand new xorg.conf...

Do an init 6 to see if X take the changes, but nothing habbened: also tryed to do pkg-reconfigure -changedir /etc/X11 (where I created the new xorg.conf) and nothing.. removed the X conf from /tmp.. also do sudo apt-get update / upgrade... and no luck...

UPDATE Updated to 12.04. This an edited xorg fr old dells like mine:

# xorg.conf (X.Org X Window System server configuration file)
#
# This file was generated by dexconf, the Debian X Configuration tool, using
# values from the debconf database.
#
# Edit this file with caution, and see the xorg.conf manual page.
# (Type "man xorg.conf" at the shell prompt.)
#
# This file is automatically updated on xserver-xorg package upgrades *only*
# if it has not been modified since the last upgrade of the xserver-xorg
# package.
#
# If you have edited this file but would like it to be automatically updated
# again, run the following command:
#   sudo dpkg-reconfigure -phigh xserver-xorg
# xorg.conf for dell latitude c600 by A. Howlett and others

Section "ServerLayout"
        Identifier      "Default Server Layout"
        Screen          0 "Screen0"
        InputDevice     "Keyboard0" "CoreKeyboard"
        InputDevice     "Mouse0" "CorePointer"
        InputDevice     "Generic Mouse" "AlwaysCore"
EndSection

Section "Files"
    RgbPath     "/usr/X11R6/lib/X11/rgb"  
    FontPath    "/usr/share/fonts/local"
    FontPath    "/usr/share/fonts/misc"
    FontPath    "/usr/share/fonts/75dpi:unscaled"
    FontPath    "/usr/share/fonts/100dpi:unscaled"
    FontPath    "/usr/share/fonts/Type1"
    FontPath    "/usr/share/fonts/CID"
    FontPath    "/usr/share/fonts/Speedo"
    FontPath    "/usr/share/fonts/cyrillic"
    FontPath    "/usr/share/fonts/artwiz-aleczapka"
    FontPath    "/usr/share/fonts/TTF"
    FontPath    "/usr/share/fonts/util"
    FontPath    "/usr/local/share/fonts"
    FontPath    "/usr/share/fonts"
    FontPath    "/usr/share/fonts"
    FontPath    "/usr/share/fonts/aquafont"
    FontPath    "/usr/share/fonts/artwiz"
    FontPath    "/usr/share/fonts/artwiz-aleczapka-en"
    FontPath    "/usr/share/fonts/corefonts"
    FontPath    "/usr/share/fonts/freefont"
EndSection

Section "Module"
        Load  "GLcore"
        Load  "dbe"
        Load  "dri"
        Load  "extmod"
        Load  "glx"
        Load  "pex5"
        Load  "record"
        Load  "xie"
        Load  "v4l"
        Load  "freetype"
EndSection

Section "InputDevice"
        Identifier  "Keyboard0"
        Driver      "keyboard"
        Option      "XkbModel" "pc104"
        Option      "XkbLayout"       "us"
EndSection

Section "InputDevice"
        Identifier      "Mouse0"
        Driver          "mouse"
        Option          "CorePointer"
        Option          "Device"                "/dev/psaux"
        Option          "Protocol"            "PS/2"
        Option          "Emulate3Buttons"     "true"
        Option          "ZAxisMapping"                "4 5"
EndSection

Section "InputDevice"
        Identifier      "Generic Mouse"
        Driver          "mouse"
        Option          "SendCoreEvents"      "true"
        Option          "Device"              "/dev/input/mice"
        Option          "Protocol"            "ImPS/2"
        Option          "Emulate3Buttons"     "true"
        Option          "ZAxisMapping"                "4 5"
EndSection

Section "Monitor"
        Identifier "laptop LCD"
        VendorName "Dell"
        ModelName  "Latitude C600"
        HorizSync 31.5-48.5
        VertRefresh 40-70
EndSection

Section "Device"
        Identifier  "Video0"
        Driver      "r128"
        VideoRam     8192
        Option      "EnablePageFlip" "true"
        Option      "AGPFastWrite"  "true"
        Option      "AGPMode"     "2" 
        BusID       "PCI:01:00:0"
        Screen      0
        Option      "Display"  "FP"
        Option      "MonitorLayout"  "CRT, LFP"
EndSection

Section "Screen"
        Identifier "Screen0"
        Device "Video0"
        Monitor "laptop LCD"
        DefaultDepth 16
        Subsection "Display"
                Depth 32
                Modes  "1280x1024" "1152x864" "1024x768" "800x600" "640x480"
        EndSubSection
        Subsection "Display"
                Depth 24
                Modes  "1280x1024" "1152x864" "1024x768" "800x600" "640x480"
        EndSubSection
        Subsection "Display"
                Depth 16
                Modes "1280x1024" "1152x864" "1024x768" "800x600" "640x480"
        EndSubSection
        Subsection "Display"
                Depth 8
                Modes  "1280x1024" "1152x864" "1024x768" "800x600" "640x480"
        EndSubSection
EndSection

Section "DRI"
       Mode    0666
EndSection