I installed Precise Pangolin x386 Desktop version via USB stick without incident.
There are two, possibly related, problems:
After suspend (e.g. closing the lid), the graphics are corrupted as shown in this pic: http://imgur.com/hoIBQ. The only solution seems to be a complete reboot.
Upon booting, the following happens: The screen goes black. After a while the little sound notification is heard. By switching to a text terminal (Ctrl+Alt+F5) and then immediately back (Ctrl+Alt+F7) I get the X session. However, the graphics are corrupted. Only the top half of the screen is used, and both halves of the desktop are rendered on top of each other. The mouse movement wrap around the top and bottom of the screen. The only solution is to log in, then log out again. After doing this the graphics are normal until next suspend or power-off.
I have tried disabling desktop effect, logging in with Unity 2D, and uninstalling Compiz, without success.
I've had this computer for years without successfully being able to run Linux on it, please help!
I found probably the best solution to fix graphic error: add "service lightdm restart" line to rc.local.
Add to new line after coments and before "exit 0":
After implementing the first two options in this post, issue 2 is now resolved.
Issue 1 was resolved after fixing a minor formatting error in the above link.
The command should be
not
ADD_PARAMETERS='–quirk-vbemode-restore'