You definitely need the proprietary driver. The Moblin interface requires 3d acceleration, so nv and nouveu are out.
As for getting the proprietary driver to work, a couple thoughts:
1) have you tried the version from the repo's? Is there an ION driver in there even?
2) do you have the kernel headers and build-essential packages installed? Envy will have to build against the kernel and will need those tools.
3) If you've done the above and it still fails, could you run envy from the CLI and post the specific error it outputs?
4) If all of the above fail, read this: http://lists.moblin.org/pipermail/dev/2009-June/005051.html. I doubt this is the issue, because this package was from the Fedora-based Moblin release, and not Ubuntu's xserver. But it is possibly an issue in Ubuntu as well.
EDIT: Unfortunately, since Moblin is an Intel project, there hasn't been much work into getting the proprietary drivers working with them. Not to mention, almost all atom-based netbooks had intel graphics until ION came out recently, so there may be bugs that simply haven't been worked out yet. If there was an open nvidia driver...