I knew that before I did this there may be incompatibility problems with this card and Lion on the older Mac Pros,
Although some users have complained of problems, their wounds may be self-inflicted. Use of a non-Apple ATI 5770 or failure to upgrade to at least 10.6.5 are high on the list. The main "issue", if you can even call it that, is the card runs more slowly than its published benchmarks due to PCIe 1 slots in the Mac Pro 1,2 and 2,1.
I also get a loading bar for about 20 seconds. This gets to about 20% then disappears.
That progress bar is indicative of unresolved Hard Drive problems. You need to boot to an alternate source of software (Hold Command-R at startup for Recovery_HD if you are running later than 10.6.8) and check the SMART Status and then select Macintosh_HD or whatever you renamed it and ( Repair Disk ). Repeat until all problems are resolved or it gets stuck. If you need help, copy the EXACT error message back here.
Grant - thank you so much for pointing me in the right direction. There was indeed a problem with the Mac-HD. Repair disc was unable to resolve the issue - but thankfully I had backed up on TM about a week before the graphics card failed. I restored from TM, and I am delighted to say I am typing this reply on my Mac instead of my PS3!
Hopefully this will keep my dear old 2006 machine going for a couple more years.
Thanks once again!