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Do you have a desktop manager or anything similar installed that could be overriding the ATI settings? I know there are ways to lock orientation (we used something at my old job to keep the jokesters from turning the training computer displays upside down) but I'm drawing a blank on the specifics.
Sometimes the ATI software can get weird, and an update often fixes it. I have no idea if that's part of your problem, but it's worth looking for an update.
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