Comment 7 for bug 526955

Re comment 6: I get this in Maverick too. I've found the advice in this forum post helpful: http://ubuntuforums.org/showthread.php?t=1047029
Basically you can use the command-line to tell nvidia-settings to reset which displays are present. It then properly forgets about the old display and allows you to use the dialog to detect the new one. I'm using the latest packaged drivers (260.19.06-0ubuntu1)
Here's a short script that should reset to only using the laptop's local LCD:

#!/bin/bash
echo Current display status
nvidia-settings -d -q AssociatedDisplays
echo Configuring to only know about LCD display
nvidia-settings -a AssociatedDisplays=0x00010000
echo Updated display status
nvidia-settings -d -q AssociatedDisplays