Ok I have it working of sorts!
Rather than starting /etc/init.d/xdm start I ran startx to start an X session with KDE. When I use aiglx-setup enable i get compiz splash screen and all the xeffects. The problem then is that my kde menu appears blank white and I can not use the keyboard or launch applications successfully. Selecting another windows manager other than compiz and my desktop returns to normal. However when using /etc/init.d/xdm start I get no xeffects.
Compiz, KDE, Gnome, Fluxbox, etc...