VT = Virtual Console, ie: the Linux console, not to be confused with the xterm terminal you get in your desktop environment (Gnome, Unity, XFCE4 etc).
To access the console press <Ctrl> + <Alt> + <Fx>, where F1 is for the first, F2 the second etc. Note that X usually use VT7, so <Ctrl> + <Alt> + <F7> will get you back to your desktop environment if it's running.
It's strange that the Additional Drivers app did not blacklist the Nouveau drivers though. Probably a bug. I don't use Ubuntu, so can't say for sure.
Note though that the nvidia-current may only install the 2D drivers. If you need 3D, you will also need to install the GLX drivers.
I never install the driver from the repos, I always download the appropriate one for my FX5200 card from geforce.com
and use that. That provides the option to install both the 2D and 3D drivers.
Glad it worked out for you in the end.
BTW: Since DKMS did not handle the install properly, you may need to repeat the above for each new kernel or kernel updates that you install.