No, SELinux has not been disabled, this is a vanilla fresh Fedora Core 4 install. I wasn't aware of any SELinux issue, but on the other hand we don't have any problem with at least four other Fedora Core 4 workstations, all with (older) Nvidia cards.
I went through README
again and I guess you're referring to this FAQ:
Q. Why does X crash when starting on Fedora Core 4?
A. There are interaction problems with SELinux (enabled by default on Fedora
Core 4) and the NVIDIA graphics driver. NVIDIA is investigating this, but
it is recommended that you append the kernel boot option "selinux=0" to the
kernel boot line in your grub.conf file. You must reinstall the NVIDIA
driver after adding this option.
I'll try this and let you know. Thank you for your help.
For what it's worth, removing from xorg.conf line:
fixes the problem - but that's obviously not what we want.