Hi,

I have the same problem. 
My config is : 
- Nvidia Geforce MX440 128MB dualhead,
- Two monitors wich one with 1024 x 768 - 87Hz (my nvidia maximum is 2048 x 
2048),
- Ubuntu 7.10 (plus kubuntu-desktop and xubuntu-desktop packages), 
- Twinview configuration,
- nvidia-glx package.
- Emerald packages.

Some different things, same behavior.

** Attachment added: "xorg.conf"
   http://launchpadlibrarian.net/10674770/xorg.conf

-- 
[gutsy] In a dual head setup with different resolutions, background wallpaper + 
desktop icons disappear when compiz runs
https://bugs.launchpad.net/bugs/160226
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