Picture cropping when extending desktop to second monitor

When I extend my desktop to my Sony VPL-VW50 projector, it crops the picture so that it doesn't fill the screen. The problem persists even as I set my projector as primary display and when I change resolution to 720p instead of 1080p.

I've got Windows 7 Professional 64 running with the latest Catalyst driver for my Radeon HD 5770. This wasn't an issue earlier today when I was still using Windows XP Professional SP3.

Any ideas?

Attached a picture illustrating the problem.


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