Modesetting fails if large screen monitor attached at boot

I have a Thinkpad T60. If I boot from the RC1 live CD, graphical modesetting seems to work well if the external monitor is not connected at boot time. If I then plug in the monitor, I can then switch to a new resolution (1920x1080) from the old resolution (1400x1050). Switching back and forth multiple times seems to work well, in the 10 minutes I've been playing with the system.

However, if I boot with the monitor connected, then the resolution is set to 1024x768 on both screens, and when I try to set the resolution to something more useful, eventually the entire screen starts flickering with weird horizontal lines on the laptop's monitor, and the external monitor display wiggles around rapidly. The display is not usable under such circumstances. External monitor: Dell S2409W

Apparent workaround: boot with monitor disconnected, and then after logging in, connect the external monitor.

ProblemType: Bug
DistroRelease: Ubuntu 10.04
Package: linux-image-2.6.32-21-generic 2.6.32-21.32
Regression: Yes
Reproducible: Yes
ProcVersionSignature: Ubuntu 2.6.32-21.32-generic 2.6.32.11+drm33.2
Uname: Linux 2.6.32-21-generic i686
AlsaVersion: Advanced Linux Sound Architecture Driver Version 1.0.21.
Architecture: i386
ArecordDevices:
 **** List of CAPTURE Hardware Devices ****
 card 0: Intel [HDA Intel], device 0: AD198x Analog [AD198x Analog]
   Subdevices: 1/1
   Subdevice #0: subdevice #0
AudioDevicesInUse:
 USER PID ACCESS COMMAND
 /dev/snd/controlC0: ubuntu 3084 F.... knotify4
                      ubuntu 3127 F.... kmix
CRDA: Error: [Errno 2] No such file or directory
Card0.Amixer.info:
 Card hw:0 'Intel'/'HDA Intel at 0xee400000 irq 17'
   Mixer name : 'Analog Devices AD1981'
   Components : 'HDA:11d41981,17aa2025,00100200'
   Controls : 20
   Simple ctrls : 11
Card29.Amixer.info:
 Card hw:29 'ThinkPadEC'/'ThinkPad Console Audio Control at EC reg 0x30, fw 79HT43WW-1.02'
   Mixer name : 'ThinkPad EC 79HT43WW-1.02'
   Components : ''
   Controls : 2
   Simple ctrls : 1
Card29.Amixer.values:
 Simple mixer control 'Console',0
   Capabilities: pvolume pvolume-joined pswitch pswitch-joined penum
   Playback channels: Mono
   Limits: Playback 0 - 14
   Mono: Playback 14 [100%] [on]
Date: Sun Apr 25 22:11:40 2010
HotplugNewDevices:

HotplugNewMounts:

LiveMediaBuild: Kubuntu 10.04 "Lucid Lynx" - Release Candidate i386 (20100419.1)
MachineType: LENOVO 2623D7U
PccardctlIdent:
 Socket 0:
   no product info available
PccardctlStatus:
 Socket 0:
   no card
ProcCmdLine: BOOT_IMAGE=/casper/vmlinuz file=/cdrom/preseed/khostname.seed boot=casper initrd=/casper/initrd.lz quiet splash --
ProcEnviron:
 LANGUAGE=
 LANG=en_US.UTF-8
 SHELL=/bin/bash
RelatedPackageVersions: linux-firmware 1.34
SourcePackage: linux
Symptom: storage
UdevMonitorLog:
 monitor will print the received events for:
 UDEV - the event which udev sends out after rule processing
UdisksMonitorLog: Monitoring activity from the disks daemon. Press Ctrl+C to cancel.
dmi.bios.date: 04/18/2006
dmi.bios.vendor: LENOVO
dmi.bios.version: 79ET60WW (1.05a)
dmi.board.name: 2623D7U
dmi.board.vendor: LENOVO
dmi.board.version: Not Available
dmi.chassis.asset.tag: No Asset Information
dmi.chassis.type: 10
dmi.chassis.vendor: LENOVO
dmi.chassis.version: Not Available
dmi.modalias: dmi:bvnLENOVO:bvr79ET60WW(1.05a):bd04/18/2006:svnLENOVO:pn2623D7U:pvrThinkPadT60:rvnLENOVO:rn2623D7U:rvrNotAvailable:cvnLENOVO:ct10:cvrNotAvailable:
dmi.product.name: 2623D7U
dmi.product.version: ThinkPad T60
dmi.sys.vendor: LENOVO
---
Architecture: i386
DistroRelease: Ubuntu 10.04
DkmsStatus: Error: [Errno 2] No such file or directory
LiveMediaBuild: Kubuntu 10.04 LTS "Lucid Lynx" - Release i386 (20100427)
MachineType: LENOVO 2623D7U
Package: xorg 1:7.5+5ubuntu1
PackageArchitecture: i386
PccardctlIdent:
 Socket 0:
   no product info available
PccardctlStatus:
 Socket 0:
   no card
ProcCmdLine: BOOT_IMAGE=/casper/vmlinuz file=/cdrom/preseed/khostname.seed boot=casper initrd=/casper/initrd.lz quiet splash --
ProcEnviron:
 LANGUAGE=
 LANG=en_US.UTF-8
 SHELL=/bin/bash
ProcVersionSignature: Ubuntu 2.6.32-21.32-generic 2.6.32.11+drm33.2
Tags: lucid lucid
Uname: Linux 2.6.32-21-generic i686
UserGroups: adm admin cdrom dialout lpadmin plugdev sambashare
dmi.bios.date: 04/18/2006
dmi.bios.vendor: LENOVO
dmi.bios.version: 79ET60WW (1.05a)
dmi.board.name: 2623D7U
dmi.board.vendor: LENOVO
dmi.board.version: Not Available
dmi.chassis.asset.tag: No Asset Information
dmi.chassis.type: 10
dmi.chassis.vendor: LENOVO
dmi.chassis.version: Not Available
dmi.modalias: dmi:bvnLENOVO:bvr79ET60WW(1.05a):bd04/18/2006:svnLENOVO:pn2623D7U:pvrThinkPadT60:rvnLENOVO:rn2623D7U:rvrNotAvailable:cvnLENOVO:ct10:cvrNotAvailable:
dmi.product.name: 2623D7U
dmi.product.version: ThinkPad T60
dmi.sys.vendor: LENOVO
glxinfo: Error: [Errno 2] No such file or directory
system:
 distro: Ubuntu
 codename: lucid
 architecture: i686
 kernel: 2.6.32-21-generic