Hello! It seems I've come across most of the problems described in this thread. As there doesn't seem to be a universal solution for handling secondary display problems I might as well suggest the best I have in my arsenal (starting with the basic ones):
1. So you've updated the drivers to both your monitor and graphics card (naturally) - and in case you have a notebook you modified them with modtool, right? I'm only telling you the last part, as the drivers on ATI's download page aren't for notebooks/laptops. Which is why you actually have to address your notebook manufacturer each time you have a problem with your graphics card. Sure you are already aware of this.
2. As you can actually see the system information on startup, on BOTH screens, obviously there isn't anything wrong with the monitors nor the graphics card, but instead there is something wrong with the settings. I've experienced this before and got it to work. So DON'T throw anything away! :)
3. You have an ATI card and Catalyst Control Center. I imagine that you, in CCC/Display Manager, can see your secondary display icon, which you have then cloned. I understood this correctly, right? Okay... When I had this problem, it was due to a refresh rate/resolution incompatibility issue with my two monitors. Now, my secondary monitor was an HDTV (Philips), but the logic seems to be the same.
Here's what I did to make it work:
Step 1) In Display Options I have a drop-down from which I selected something like (display only refresh rates/resolutions which works on all displays). Mine is in Swedish so I'm just guessing what it's called in English. It shouldn't be hard to find. Then click Apply.
Step 2) In Display Manager (still in CCC), I have a button called Force. Upon clicking it I receive four different alternatives, among which one is called 'HDTV'. Choosing that gives me a number of resolution/refresh rate options. Pick one - maybe some resolution at 60 Hz if available. Now it could actually work.
Hope it helped!