I have an ATI x1600 and salimeryigit's solution from jun '08 works great. Just do as he says:
"For ATI...Alternative 1: Go to
http://www.omegadrivers.net/ and download ati driver..."
1. Download and install the omega driver
2. Start the ATI tray tools
3. Go to display -> settings
4. Display 2 should refer to your external monitor and report connected.
5. If your system does not detect display limits ( mine did not ), Click DDC for display 2 and set to your specific monitor's max resolution ( I set it to my TV's setting of 1024x768 )
6. Since I was connecting to an HDTV, I also turned on support for 720p in display 2 -> options -> advanced. Depending on the type of monitor you have, you may or may not need it
7. Click Power On and you should see your screen flash and your external monitor should display your desktop