Haven't had any *real* insight or progress till now. I got it fixed... here's how I did it.
First I ran this to make sure sawfish worked:
killall metacity && sawfish
Afterwards, I switch to root and run "gconf-editor". From there go through --> Desktop --> Gnome --> applications --> window_manager and change they key "default" to "/usr/bin/sawfish". Restart X and enjoy!