Open up /etc/X11/xorg.conf in kwrite and tell us, if you would, if DRI is enabled under the Module section. Also check if composite is enabled, it will be under its own section probably near the bottom of xorg. Next, in konsole,
1) Does glxgears produce the appropriate gears animation? Do the FPS listed for it seem reasonable for your card setup?
2) Type glxinfo in konsole. The 3rd or 4th or so lines will give you useful information, particularly saying if direct rendering is enabled or not. Is it? If not, that's your problem.
3) I don't have an ATI card myself, so take this with a grain of salt: I've heard that ati cards require some games to be loaded (because of xgl instead of aiglx) on another x session. We can show you how to do so easily if it's not one of the other problems suggested. Or, you can update to the newest ati drivers, which i'm quite sure FINALLY have aiglx support.