This is how I did it.
On a Windows machine go to
http://www.nvidia.com and download the latest driver for 32 bit Linux in this case it was 177.82.
Then I FTP into the test XBMCLive machine and transferred the driver over to the xbmc folder.
Then on the xbmc machine I hit ctl-alt-f2 and login xbmc/xbmc then I issued a sudo su and again a sudo password which it rejected but ignored.
Then I downld the build-essential and the linux headers with this command
sudo apt-get install build-essential linux-headers-`uname -r` (uname-r = 2.6.24-19-generic without the quotes)
let it install all of the req'd files it may take a while and when it asks if you want to continue make sure and type the right Y or N for yes or no.
Then issue a telinit 1 command when you are done with the above
now change directories to cd /home/xbmc and hit enter
then type
sudo sh NVIDIA-Linux-x86-<version>-pkg1.run (version = actual number in my case it was 177.82) hit enter
In the NVIDIA installer, say no to the fiirst error to continue. say yes to everything else and allow it to overwrite your xorg.conf.
when back at the prompt type in reboot and you have the newest driver installed.
WARNING - I installed a bunch of packages not needed for this install and everything it still stable. I would back up your xorg.conf file and your userdata folder first before trying this or do it on a test machine.
The most important factor not too forget is the telinit 1 this shutsdown most everything on the system allowing for the driver to install.
Now if one of the devs could chime in on this and tell us if this method actually forces XBMCLive to use the newest driver. The video page in system info does not seem to change after the install. I am still seeing a everchanging but close to 100Hz refresh rate beside my res in Video system info page, my other question is Does the driver poll the V/C for the GPU temp. I cannot get a temp reading from the card within the video system info page.
rgds,
Dave