Looking at your log file,I've noticed the following:
Kernel command line: BOOT_IMAGE=/boot/vmlinuz-2.6.32-5-686 root=UUID=65489270-556d-4ee3-ab59-352bf8ae69a7 ro quiet
Which is different to what I have on my system,try adding the following to /etc/default/grub
You will need to run update-grub
Then try to reinstall the driver again.
Shall i reinstall Debian 6 with full DE this time from net install
What Xorg packages have you installed on your system?,here's what I have using Testing:
ade@Pc1:~$ dpkg -l | grep xorg
ii xserver-xorg 1:7.6+7 X.Org X server
ii xserver-xorg-core 2:220.127.116.112-1 Xorg X server - core server
ii xserver-xorg-input-evdev 1:2.6.0-2+b1 X.Org X server -- evdev input driver
ii xserver-xorg-video-vesa 1:2.3.0-7 X.Org X server -- VESA display driver
Plus the Nvidia driver obviously.