I have the same set up with the same symptoms, however there is a
workaround - Bob, when you enable dual monitors log out and back in
again and it should be ok, you will need to add a logout button to the
panel away from the garbled mess:)

This works but if enabling desktop effects under appearance, the display
gets messed up as described above and a log out and back in again
somehow reverts it back to "no effects"

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https://bugs.launchpad.net/bugs/706890

Title:
  dual monitors garbled display on 10.10 with Radeon X600

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