I have the same setup except that I'm running 10.6.5. The trick is that it does not work if mirroring is turned on.
Here is the solution from another forum:
open terminal first (without 2nd screen plugged in)
type "mirroring off" (without quotes) but don't hit return
connect 2nd display
wait a few seconds then hit return and it should reset the display to two seperate screens at different resolutions
http://www.mydellmini.com/forum/gen...ion/5464-mini-9-mirroring-display-busted.html
