I gave up on trying to get dual-monitor mode to behave on an NVidia FX 1700, which came with my Dell R5400 workstation. I could never get the drivers working properly - could not even get both monitors to sync at the same resolution.
I decided to try an on-hand ATI Radeon HD 4650, 1Gb. Things went a lot smoother installing the drivers (ati-driver-installer-9-6-x86.x86_64.run) and the system even seems quicker. Now I get perfect, clean, crisp, synched, and identical displays at the appropriate resolution on both screens.
Regardless of whether Xinerama mode is switched on or not, both displays are of a single desktop.
I have not found any troubleshooting information on this issue. I want to proceed with Xen installation but need to get this working first. What to do?
P.S. At startup and shutdown the screens flash and block distort a lot. When I try to make changes to the display setting test mode of sax2 will frequently freeze, forcing me to switch to tty console, kill xdm, then start it again. The settings are preserved, but this leads me to wonder about stability.