The Unofficial AMD Linux Driver Wiki says:
ATI Radeon 9500-9800, Xpress200-1250, 690G, 740G, X300-X2500, Mobility RadeonHD 2300 If your card is on that list, you are limited to open-source drivers on Ubuntu Lucid/10.04 (and later). If you really need the proprietary Catalyst/fglrx driver, you will have to use an older Linux distribution, such as Debian Lenny/5.0.x or Ubuntu Hardy/8.04.x. NOTE: If you enter your card information on AMD/ATI's driver page, it will offer you the Catalyst 9-3 driver to download. However, the Catalyst 9-3 driver doesn't support X servers past 1.5, and it will not work with Precise (or anything later than Lucid/10,04)! !!!SO BE CAREFUL!!! If you tried to install Catalyst on a system with one of these cards, see the 'Removing the Driver' section to restore the default/pre-installed drivers.
This maybe include the ATI Radeon Mobility X1600 graphic card. It means that your card isn't supported anymore by the proprietary Fglrx driver. But you card is supported by the open source Radeon driver:
RV530/RV560 Radeon X1600/X1650/X1700
so your card should work.
If the output from this command:
lspci -nnk | grep -i vga -A3 | grep 'in use' is:
Kernel driver in use: radeon, your Radeon graphic driver is loaded.