Confirmed for 1280x800. You can use killall notify-osd to make it appear
good. Which makes me think it is due to notify-osd being started faster
than the panels are loaded.

-- 
notify-osd notifications are on top of panel
https://bugs.launchpad.net/bugs/332333
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Status in Canonical's Notification Display Agent: Confirmed

Bug description:
This occured on my eee pc 900. I'm guessing this is because of the small screen 
resolution.
My desktop works fine, showing them below the panel.

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