Comment 5 for bug 226359

The common factor is compiz. If you turn off desktop effects, the top of the second display is drawn correctly. With special effects on, the top of the screen (an area equivalent to the gnome panel) is not redrawn correctly.

compiz 1:0.7.4-0ubuntu7
nvidia 173.14.15 driver (also occurs with nvidia-glx-new version 169.12)
kernel 2.6.24-18-generic
xserver-xorg-core 2:1.4.1~git20080131-1ubuntu9.1