I've got the same set up, but I think I organised it through the graphics card (Nvidia Geforce 7600 GT) - there's an option to run multiple displays, then when you get so far, I think there's an option to extend the display over 2 monitors. There are also options to treat both monitors as one space or to have them identical.
I'm sure someone will come along with the exact instructions. It's one of those things which drive you mad until you hit one the correct options!
At one point, instead of dragging tools to the left from monitor 1 to monitor 2, they sort of vanished from one side, 'went round the back' and reappeared on the wrong side of the other screen.