Sounds like your video card driver isn't installed or properly enabled. To verify this you can run /usr/bin/glxinfo and see if it says "Yes" or "No" for "Direct rendering".

If it says no then your system doesn't use your graphics card for rendering your graphics, games etc.

Have you tried getting an ati driver via apt-get? Maybe apt-get install ati-fglrx?

Got to this before I did. Exactly what I would have mentioned. Also, if you're good with booting in rescue mode and recovering your /etc/X11/xorg.conf file and editing it in 'vi' or 'pico' (not something for the faint of heart), then you can also try commenting out a line by line option in the Modules section, rebooting, and seeing if one of those items was the culprit.

You can also mess with 'dpkg-reconfigure xserver-xorg', but I would highly recommend you save a copy of /etc/X11/xorg.conf before doing this so that you have a fallback position.

Oh supermike you reminded me of some things that should be set right in /etc/X11/xorg.conf for direct rendering to work:

You have to have this in Section "Module" of xorg.conf file to load the DRI and GLX modules:

# This loads the GLX module
    Load       "glx"
# This loads the DRI module
    Load       "dri"

And this as well (which I usually put at the very end of a file):

 Section "DRI"
    Mode 0666
 EndSection

And no, 0666 has nothing to do with devils.

Cheers
Daniel

fglrx is the ATI proprietary driver, and not needed for Radeon 9200.

Also remember to set the driver name to "radeon", and not "ati" or "vesa" or etc.:

Section "Device"
        [.....................]
        Driver          "radeon"
EndSection

fglrx will mess up your system. DO NOT INSTALL IT. Just be sure GLX and DRI are enabled with the radeon driver.

Oh excuse me.. I thought that ati-fglrx may have been a xorg package. I looked it up on Arch repo and that's what I found. I guess that's one downside of using a distro which packages both free and nonfree stuff in same repos.. gotta be careful..

So any luck with your driver newfie?

Okey here is my conf: (sorry for bigness)

Section "Files"
FontPath "/usr/share/X11/fonts/misc"
FontPath "/usr/share/X11/fonts/cyrillic"
FontPath "/usr/share/X11/fonts/100dpi/:unscaled"
FontPath "/usr/share/X11/fonts/75dpi/:unscaled"
FontPath "/usr/share/X11/fonts/Type1"
FontPath "/usr/share/X11/fonts/100dpi"
FontPath "/usr/share/X11/fonts/75dpi"
# path to defoma fonts
FontPath "/var/lib/defoma/x-ttcidfont-conf.d/dirs/TrueType"
EndSection

Section "Module"
Load "bitmap"
Load "ddc"
Load "dri"
Load "extmod"
Load "freetype"
Load "glx"
Load "int10"
Load "type1"
Load "vbe"
EndSection

Section "InputDevice"
Identifier "Generic Keyboard"
Driver "kbd"
Option "CoreKeyboard"
Option "XkbRules" "xorg"
Option "XkbModel" "pc104"
Option "XkbLayout" "us"
EndSection

Section "InputDevice"
Identifier "Configured Mouse"
Driver "mouse"
Option "CorePointer"
Option "Device" "/dev/input/mice"
Option "Protocol" "ExplorerPS/2"
Option "ZAxisMapping" "4 5"
Option "Emulate3Buttons" "true"
EndSection

Section "InputDevice"
Driver "wacom"
Identifier "stylus"
Option "Device" "/dev/wacom" # Change to
# /dev/input/event
# for USB
Option "Type" "stylus"
Option "ForceDevice" "ISDV4" # Tablet PC ONLY
EndSection

Section "InputDevice"
Driver "wacom"
Identifier "eraser"
Option "Device" "/dev/wacom" # Change to
# /dev/input/event
# for USB
Option "Type" "eraser"
Option "ForceDevice" "ISDV4" # Tablet PC ONLY
EndSection

Section "InputDevice"
Driver "wacom"
Identifier "cursor"
Option "Device" "/dev/wacom" # Change to
# /dev/input/event
# for USB
Option "Type" "cursor"
Option "ForceDevice" "ISDV4" # Tablet PC ONLY
EndSection

Section "Device"
Identifier "ATI Technologies, Inc. RV280 [Radeon 9200]"
Driver "ati"
BusID "PCI:0:16:0"
Option "UseFBDev" "true"
EndSection

Section "Monitor"
Identifier "DELL E771mm"
Option "DPMS"
HorizSync 45-85
VertRefresh 50-160
EndSection

Section "Screen"
Identifier "Default Screen"
Device "ATI Technologies, Inc. RV280 [Radeon 9200]"
Monitor "DELL E771mm"
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

Section "ServerLayout"
Identifier "Default Layout"
Screen "Default Screen"
InputDevice "Generic Keyboard"
InputDevice "Configured Mouse"
InputDevice "stylus" "SendCoreEvents"
InputDevice "cursor" "SendCoreEvents"
InputDevice "eraser" "SendCoreEvents"
EndSection

Section "DRI"
Mode 0666
EndSection

---------------------------------
running: /usr/bin/glxinfo i get:

name of display: :0.0
display: :0 screen: 0
direct rendering: Yes
server glx vendor string: SGI
server glx version string: 1.2
... etc

Thanks.

That seems to be fine. You have the proper lines in xorg.conf and glxinfo indicates direct rendering is on..

Do you still have a problem?

If yes then the issue is apparently somewhere else and we'd need to make some sort of troubleshooting..

> DefaultDepth 24

Have you tried changing this to 16 ? 

Making it 16 helped barley it is still quite annoying moving windows and it still "lags"

Maybe it's a hardware issue? Is the GPU getting enough electricity?