What's wrong with my VGA card or driver?

This problem has been plaguing me for months. It probably started after I installed something but I have no idea really.

My system: Asus N61J laptop
CPU: I7-720M
VGA: ATI Mobility Radeon HD 5730, VRAM: 1GB
Main Display: 16" HD/LED BL 1366 x 765 A 60Hz
Secondary Display: Dell 2405 FPW 1200 x 1920 @ 60 Hz
The Dell is connected via a standard VGA cable.

Occasionally, without warning my displays go all freaky. The weirdness looks almost like what you saw when you switched to an empty channel on an old analog color TV, except that it's static. It starts out in one small section of the screen and as I move the mouse and click, an area a few square inches is "contaminated" and soon both screens are screwed up. Sometimes they get all screwed up without my moving the mouse around or clicking.

Today for the first time (for reasons unknown to me) it did self-correct. A dialog appeared very briefly saying the video driver had a problem but recovered. A little while later, though, the problem returned.

Now here's the weirdest part:

I usually keep the Dell 24" in portrait mode because I do a lot of writing and I think it's the logical orientation for cruising the Web (1200 x 1920).

However when I want to watch a movie or TV show I generally switch to landscape mode (1920 x 1200). This is the mode I would bet 95% of users use 95% of the time.

The problem happens ONLY when the Dell is in landscape mode!

WTF? I can sometimes go an hour or two after switching--sometimes more, often less. But it always happens sooner or later.

I've tried updating my ATI driver but that did not help the problem.

Driver date: 1/22/2010
Driver version: 8.962.1.0

No conflicting resources.

I've attached two photos of what the weirdness looks like on the Dell but the laptop screen is identical. (Obviously I can't take an actual screenshot when the screens are all screwy.)

Once in a while if I tap the computer's physical Start button it will do some kind of super-strange-unknown-almost reboot and recover. But I almost always have to hold down the button and force a real reboot to get back to normal.

Then sometimes I get that BSOD "Do you want to boot into safe mode etc." when the system comes alive (and curses for my not writing down the technical info--I will next time I see it.) Oh and I can't really make another choice than to reboot normally; the arrow keys don't move the highlight so I have to choose the default reboot normally.

But often I just get the normal login screen, as I did today.

Can anybody here help figure what the heck is going on and how I can fix it?

If you can you will have my eternal gratitude,

Many thanks,

WindowPain.