Comment 10 for bug 286424

The problem is caused by the absence of a ServerLayout section in Xorg.conf. (nvidia-settings assumes there is one such section).

If there is nothing really customized about your xorg.conf, one possible workaround would be to delete it after you log into X and then execute nvidia-settings. Nvidia-settings will then create a new xorg.conf instead of trying to (unsuccessfully) merge with your current xorg.conf. You will have to specify /etc/X11/xorg.conf after you press Save to X Configuration File. nvidia-setting also need to be run as root.

sudo rm /etc/X11/xorg.conf
sudo nvidia-settings