Works fine for me in Ubuntu 8.10 (although it's not the 'default'
behavior...)

I have set "When laptop lid is closed = {Do nothing}" in [ System >
Preferences > Power Management > On AC Power ]. When I close the lid,
then my laptop monitor is turned off (and stays off) and the external
monitor is still active. Isn't that exactly the way it should work?

Who would ever want the laptop monitor to be active when the lid is
closed (regardless the settings in Power management) ?!

-- 
Closing lid should not turn off external LCD
https://bugs.launchpad.net/bugs/23220
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