I still see this problem in Lucid when ever I unplug one screen, attach
another and then try to change the NVidia setup accordingly. The change
works but when I start the NVidia tool again it shows the message
mentioned above and I'm stuck until the next X-server restart.

This confirms that the bug still exists in a current version of Ubuntu.
Can you please change the status back to 'New'?

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You received this bug notification because you are a member of Ubuntu-X,
which is subscribed to nvidia-settings in Ubuntu.
https://bugs.launchpad.net/bugs/526955

Title:
  NVIDIA X Server configuration not working

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