I popped your error into Google, and came back with a couple of possibilities, but nothing definitive.
Let's try the easiest one first.
I saw a post indicating there may be some incompatibilities between some versions of the nvidia binary drivers and 2.6.23 kernels. (The link is here if you're curious: http://www.linuxinsight.com/nvidia-linu ... .6.23.html)
Try emerging the 96.43.01 version of the nvidia-drivers (emerge -av =x11-drivers/nvidia-drivers-96.43.01). If version 1.0.9639 was working, then 96.43.01 should be the newest version of the legacy drivers. You may have to adjust your package.unmask and package.keywords in your /etc/portage/ directory.
BTW, these nvidia-driver versions are for the older nVidia cards (I know because I have two computers using them ). If you have a 6000 or 7000 series nVidia card, you should be able to upgrade your drivers.
Anything that pertains to Portage