There is a report of two finger scrolling working on the Dell Inspiron 1525 here. https://wiki.archlinux.org/index.php/Dell_Inspiron_1525

The synaptics settings reported are in the old HAL XML format, but you could compare them with your values.

After a closer look at the /etc/X11/xorg.conf.d/50-synaptics.conf that you posted I suggest you change:
to
Also, there should be no need for these lines:

Hi,

I did not see the second post until now (I will try the conf file changes today once I get back home). I just tried the values from the first link that you had given. That is a very useful thread for my laptop - configuration of almost everything. However, the two-finger scrolling still doesn't work. I just followed a few links from the same link and I got to know that multiple detection of the touchpad could also be a problem (https://bbs.archlinux.org/viewtopic.php?id=104769). Then, I noticed that though the "changes" document says that the /usr/share/X11/xorg.conf.d/50-synaptics.conf will be overread if the /etc/X11/xorg.conf.d/50-synaptics.conf file exists, this doesn't seem to be happening. I figured this out because of the multiple detection statements in Xorg.0.log:
I went ahead and renamed the 50-synaptics.conf file in /usr/share/... and also commented out the touchpad section in /usr/share/X11/xorg.conf.d/10-evdev.conf. This did overcome the multiple detection problem, but did not make the two finger scrolling work still.

As I type this post, I realized that the modprobe command I had put in rc.local probably is not required now and it may get detected automatically. I have to try this and the other suggestion in the last post. I will do that and get back another post. Thanks a lot. Hoping for some success!!

I tried the suggestions, but they don't seem to make the two-finger scrolling work. So far, I have tried the values provided in the link for Inspiron 1525 and also the other two changes to the conf file!