This stumped me. Low-budget computer with a fairly decent motherboard that has onboard graphics and I can’t get the most basic compositing on my Ubuntu Hardy? Surely there is a solution that doesn’t cost money? Well, if you need a compositing window manager in order to enable such things as the AWN dock and you can’t enable Visual Effects in Preferences > Appearance, don’t give up hope.
Metacity (Gnome’s default window manager) can do compositing, though it’s turned off by default. Hit alt-f2 and type “gconf-editor” and ENTER to launch the GConf editor. Under Apps > Metacity > General, put a check next to Compositing Manager and close the application.
You should find that you screen rebuilds and you can now activate AWN without having to buy a graphics card.
NOTE: In researching this, I found an alternative compositor or tool named xcompmgr which apparently provides basic compositing support and gcompmgr which is a GUI frontend. If anyone has tried comparing the two options, I would be interested in hearing from you. Metacity vs Xcomp Manager (xcompmgr)