Some more data for anyone.
I cleared out my Events log, then deliberately triggered the failure
again, twice.
Here's a dump of my ACE Event Log:
9/8/2006	6:35:45
PM	ACEEventLogSource	Information	None	0	N/A	GLASGOWC1	0000000004:
2006-09-08 18:35:45:218    Exception: Object reference not set to an
instance of an object.
Exception  Called by: ATI.ACE.CLI.Component.Icomponent.Icomponent::Run
processID:00488
threadID

CLIIcomponent   ) domainName

cli.exe                    )
assemblyName

CLI.Component.Icomponent, Version=1.2.2405.30454,
Culture=neutral, PublicKeyToken=90ba9c70f846762e)
************************************************************************************************************************
9/8/2006	6:35:45
PM	ACEEventLogSource	Information	None	0	N/A	GLASGOWC1	0000000003:
2006-09-08 18:35:45:218    ATI ACE Runtime not found!
Error      Called by:
ATI.ACE.CLI.Component.Icomponent.Icomponent::ConnectToRuntime
processID:00488 threadID

CLIIcomponent   )
domainName

cli.exe                    )
assemblyName

CLI.Component.Icomponent, Version=1.2.2405.30454,
Culture=neutral, PublicKeyToken=90ba9c70f846762e)
------------------------------------------------------------------------------------------------------------------------
9/8/2006	6:35:45
PM	ACEEventLogSource	Information	None	0	N/A	GLASGOWC1	0000000002:
2006-09-08 18:35:45:218    Can't connect to Runtime
Error      Called by:
ATI.ACE.CLI.Component.Icomponent.Icomponent::ConnectToRuntime
processID:00488 threadID

CLIIcomponent   )
domainName

cli.exe                    )
assemblyName

CLI.Component.Icomponent, Version=1.2.2405.30454,
Culture=neutral, PublicKeyToken=90ba9c70f846762e)
------------------------------------------------------------------------------------------------------------------------
9/8/2006	6:35:45
PM	ACEEventLogSource	Information	None	0	N/A	GLASGOWC1	0000000001:
2006-09-08 18:35:45:203    Exception <Runtime@2308>: No connection
could be made because the target machine actively refused it
Exception  Called by:
ATI.ACE.LOG.Foundation.Service.Service::ConnectToObjectImpl
processID:00488 threadID

CLIIcomponent   )
domainName

cli.exe                    )
assemblyName

LOG.Foundation.Service, Version=1.2.2405.30446,
Culture=neutral, PublicKeyToken=90ba9c70f846762e)
************************************************************************************************************************
9/8/2006	6:35:42
PM	ACEEventLogSource	Information	None	0	N/A	GLASGOWC1	0000000003:
2006-09-08 18:35:42:718    Exception: Object reference not set to an
instance of an object.
Exception  Called by: ATI.ACE.CLI.Component.Icomponent.Icomponent::Run
processID:01952
threadID

CLIIcomponent   ) domainName

cli.exe                    )
assemblyName

CLI.Component.Icomponent, Version=1.2.2405.30454,
Culture=neutral, PublicKeyToken=90ba9c70f846762e)
************************************************************************************************************************
9/8/2006	6:35:42
PM	ACEEventLogSource	Information	None	0	N/A	GLASGOWC1	0000000002:
2006-09-08 18:35:42:687    ATI ACE Runtime not found!
Error      Called by:
ATI.ACE.CLI.Component.Icomponent.Icomponent::ConnectToRuntime
processID:01952 threadID

CLIIcomponent   )
domainName

cli.exe                    )
assemblyName

CLI.Component.Icomponent, Version=1.2.2405.30454,
Culture=neutral, PublicKeyToken=90ba9c70f846762e)
------------------------------------------------------------------------------------------------------------------------
9/8/2006	6:35:42
PM	ACEEventLogSource	Information	None	0	N/A	GLASGOWC1	0000000001:
2006-09-08 18:35:42:656    Can't connect to Runtime
Error      Called by:
ATI.ACE.CLI.Component.Icomponent.Icomponent::ConnectToRuntime
processID:01952 threadID

CLIIcomponent   )
domainName

cli.exe                    )
assemblyName

CLI.Component.Icomponent, Version=1.2.2405.30454,
Culture=neutral, PublicKeyToken=90ba9c70f846762e)
------------------------------------------------------------------------------------------------------------------------
9/8/2006	6:33:23
PM	ACEEventLogSource	Information	None	0	N/A	GLASGOWC1	0000000013:
2006-09-08 18:33:23:296    Target:
ATI.ACE.CLI.Aspect.OverDrive3.Graphics.Dashboard.DB_OverDrive3 Method:
ATI.ACE.CLI.Aspect.OverDrive3.Graphics.Dashboard.DB_OverDrive3
Error      Called by:
ATI.ACE.CLI.Component.Dashboard.DashboardForm:

ashboardForm_Closing
processID:03424 threadID

CLIDashboard    )
domainName

cli.exe                    )
assemblyName

CLI.Component.Dashboard, Version=1.2.2405.30455,
Culture=neutral, PublicKeyToken=90ba9c70f846762e)
------------------------------------------------------------------------------------------------------------------------
9/8/2006	6:33:23
PM	ACEEventLogSource	Information	None	0	N/A	GLASGOWC1	0000000012:
2006-09-08 18:33:23:296    Target:
ATI.ACE.CLI.Aspect.OverDrive3.Graphics.Dashboard.DB_OverDrive3 Method:
ATI.ACE.CLI.Aspect.OverDrive3.Graphics.Dashboard.DB_OverDrive3
Error      Called by:
ATI.ACE.CLI.Component.Dashboard.DashboardForm:

ashboardForm_Closing
processID:03424 threadID

CLIDashboard    )
domainName

cli.exe                    )
assemblyName

CLI.Component.Dashboard, Version=1.2.2405.30455,
Culture=neutral, PublicKeyToken=90ba9c70f846762e)
------------------------------------------------------------------------------------------------------------------------
9/8/2006	6:33:23
PM	ACEEventLogSource	Information	None	0	N/A	GLASGOWC1	0000000011:
2006-09-08 18:33:23:296    Target:
ATI.ACE.CLI.Aspect.DeviceDFP2.Graphics.Dashboard.DB_DeviceDFP2 Method:
ATI.ACE.CLI.Aspect.DeviceDFP2.Graphics.Dashboard.DB_DeviceDFP2
Error      Called by:
ATI.ACE.CLI.Component.Dashboard.DashboardForm:

ashboardForm_Closing
processID:03424 threadID

CLIDashboard    )
domainName

cli.exe                    )
assemblyName

CLI.Component.Dashboard, Version=1.2.2405.30455,
Culture=neutral, PublicKeyToken=90ba9c70f846762e)
------------------------------------------------------------------------------------------------------------------------
9/8/2006	6:33:23
PM	ACEEventLogSource	Information	None	0	N/A	GLASGOWC1	0000000010:
2006-09-08 18:33:23:296    Target:
ATI.ACE.CLI.Aspect.DeviceDFP2.Graphics.Dashboard.DB_DeviceDFP2 Method:
ATI.ACE.CLI.Aspect.DeviceDFP2.Graphics.Dashboard.DB_DeviceDFP2
Error      Called by:
ATI.ACE.CLI.Component.Dashboard.DashboardForm:

ashboardForm_Closing
processID:03424 threadID

CLIDashboard    )
domainName

cli.exe                    )
assemblyName

CLI.Component.Dashboard, Version=1.2.2405.30455,
Culture=neutral, PublicKeyToken=90ba9c70f846762e)
------------------------------------------------------------------------------------------------------------------------
9/8/2006	6:33:23
PM	ACEEventLogSource	Information	None	0	N/A	GLASGOWC1	0000000009:
2006-09-08 18:33:23:281    Removing errant RevertAfterComponentUpdated
observers.
Error      Called by:
ATI.ACE.CLI.Component.Dashboard.DashboardForm:

ashboardForm_Closing
processID:03424 threadID

CLIDashboard    )
domainName

cli.exe                    )
assemblyName

CLI.Component.Dashboard, Version=1.2.2405.30455,
Culture=neutral, PublicKeyToken=90ba9c70f846762e)
------------------------------------------------------------------------------------------------------------------------
Hope this helps.
Oh, and disabling SMARTGART with their utility (I have a PCI-Express
card) didn't help much either.