I managed to get this working by cleanly uninstalling the fglrx driver
and then reinstalling some components as detailed here.

http://gurrier.wordpress.com/2011/10/30/amd-video-problems-in-
ubuntu-11-10-oneiric-ocelot/

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https://bugs.launchpad.net/bugs/875038

Title:
  Cannot set dual display with radeon driver on Oneiric

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