Just updated to the 1.3 beta 2a and tried running the game. Put the graphics on my secondary screen (I'll explain in a sec). Since it had told me I needed to reboot, I went ahead and did that, and tried again. Same problem.
Ok, I have Windows 2000 Pro with a Radeon 8500LE AGP card and a Geforve 6200 PCI card. Both of them are dual-monitor capable, but I have one monitor on each (I got the geforce card because ATI wasn't running dual monitors under linux properly). I can try putting both monitors on a single card if that would help isolate the problem.
I'm a programmer so I'm going to use some standard terminology to explain what I think is causing what I'm seeing, it may not be completely accurate though because I haven't actually run Spy++ or anything like that.
Ok, under v1.2 release, the game works fine. It creates a window full-screen on my primary screen (I suppose it also changes video mode, but I run the game and desktop both at my LCD's native resolution) which clips any other programs running so they won't try to update the screen. Standard z-ordering stuff I'm guessing. The screen is intially black, then after galciv2 loads up to about 15MB of memory, it starts playing the video. After that the menu appears and everything runs great. All on the primary monitor. Meanwhile, whatever programs were on the secondary monitor before I started galciv2 continue running and updating. The mouse can roam between both monitors, and if I click anywhere in the second monitor galciv2 minimizes and I can use other programs, then task-switch back to galciv2. Runs equally well after task switch.
Under v1.3 beta 2a, the window is created on the primary monitor again, clipping all applications beneath it and appearing black. But then, when galciv2 goes and creates the 3-D version of a device context (a rendering surface I think), it uses the second monitor. The intro video and menu appear on the second monitor. Also, the other applications on the second monitor are not clipped, they show through galciv2 whenever they redraw. The mouse, however, is jailed in the first monitor.
The mouse still works, if I point to the location on the first screen where the menu buttons should have been, the image on the second screen highlights (mouseover), and clicking activates them as well. However between other applications drawing through the display, and having to line up the mouse on a blank screen, this is unplayable. But it gets worse...
If I task-switch away from galciv2 and back again, there's still the black window on the primary screen (still accepting mouse clicks I suspect, but...) clipping everything beneath it. And the graphics on the second screen, with other apps drawing right through unclipped. But now the mouse is simultaneously jailed in the first monitor and jailed in the second monitor. I can't move it into the first screen at all, and if I move it in the second screen, the cursor immediately jumps back to the line between the two screens (i.e. the very left edge of the second screen). The only thing to do is Ctrl+Alt+Del or Alt+Tab to task manager and end task/end process galciv2