I know there are a lot of threads about this, I've googled for this problem and searched on this forum but all I get is bits and pieces of information, and I just can't make this work. If someone could just write here a little guide or something on how to install these drivers I'd be forever grateful.
First I downloaded the drivers from ATI's homepage, and tried installing them using rpm -Uvh <rpmname>
and I get this message:
*** WARNING ***
Tailored kernel module for fglrx not present in your system.
You must go to /lib/modules/fglrx/build_mod subdir
and execute './make.sh' to build a fully customed kernel module.
Afterwards go to /lib/modules/fglrx and run './make_install.sh'
in order to install the module into your kernel's module repository.
(see readme.txt for more details.)

As of now you can still run your XServer in 2D, but hardware acclerated
OpenGL will not work and 2D graphics will lack performance.

failed.
/sbin/ldconfig: File /usr/X11R6/lib/FGL.renamed.libGL.so.1.2 is too small, not checked.

so I go to /lib/modules/fglrx/build_mod and execute make.sh and get this message:
XFree86 drm includes at /lib/modules/2.4.21-99-smp4G/build/include/../drivers/char/drm do not fit this driver.
This driver is designed to only work with X4.1.0 or higher.
You can match this by getting Linux kernel 2.4.8 or higher.

I do have XFree86 version 4.3, and my kernel version is 2.4.21. I really don't have a clue about what do to know.

and could this driver problem be the reason that my X is extremely laggy? It almost feels like I'm connected to this computer using VNC.

I hope someone can help me, it's driving me crazy.

iceaway

Do you have the matching kernel sources installed on your system?
They should be at /usr/src/linux2.4.21
If not you can download them from your distros website.
I had the same problem and have now reached a different problem with the drivers.
If all else fails id reinstall the os and include the kernel sources from the cds, then try installing the drivers.
That worked for me.

I included the sources when I installed the os, and they are in usr/src/linux.

I just checked to see if I could find /lib/modules/2.4.21-99-smp4G/build/include/../drivers/char/drm which it complains about. But that directory does not even exist..