Re: HDMI-DVI converted output to DVI display not working with 177.*
I have noticed the same. The 177.xx driver and nvidia-settings doesn't detect the second display unless I do a "detect displays". With the 173.xx driver it gets detected in Xorg.0.log and shown in the nvidia-settings. I'm not saying it's a good solution, but if the problem is within the nvidia binary driver there is little you can do.
I'm also using Ubuntu 8.10 and have minimal options in xorg.conf and saving xorg.conf works fine here. Try posting it and let's see if it can be worked out...