Section "Device"
Identifier "ATI 3D Pro Turbo"
Driver "ati"
VendorName "ATI 3D Pro Turbo"
BoardName "ATI 3D Pro Turbo"
VideoRam 8192
BusID "PCI:2:0:0"
EndSection
You are using "nvidia" driver, which is known to have problems supporting xinerama set ups. Try "nv" driver first. But then "nv" driver will not have good 3D hardware acceleration support.
Also, you might want to try KDE and see if you have the same problem.
Here's my XF86Config-4 for a dual head and a triple head display for reference.
Section "Device"
Identifier "ATI 3D Pro Turbo"
Driver "ati"
VendorName "ATI 3D Pro Turbo"
BoardName "ATI 3D Pro Turbo"
VideoRam 8192
BusID "PCI:2:0:0"
#Screen 1
EndSection