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Dedoimedo posted an article on how to troubleshoot the Nvidia driver in Ubuntu 11.04 Natty Narwhal

I am doing experiments all the time, and sometimes I stumble upon problems that other people face, often unresolved. This is my kind of challenge. For example, Ubuntu initrd problem that I faced with Jaunty way back was one of these. There were tons of online resources pointing to this or that workaround, none focused on the core issue. So my solution was completely different, and this case, it will be different, too.

Symptom: You have a computer with an Nvidia card and you installed Ubuntu 11.04 Natty. You get a prompt for Additional Drivers, which displays the proprietary Nvidia driver available for download and activation. You do that. You reboot. But on the subsequent login, the Additional Drivers manager pops again. It reads Nvidia driver is activated but not currently in use. What do you do now?
  Natty & Nvidia driver not in use error