Nvidia-Setting of "Separate X Screen" causes Nautilus to continually respawn itself 100% CPU usage

If I enable "Separate X Screen" with nvidia-settings, Xorg.conf is saved and GDM restarted - after logging back-in mouse pointer constantly alternates between pointer and spinning wheel. CPU jumping to 100%. Nautilus is constantly respawning itself trying to open a file manager window.

If Compiz is enabled, only one monitor gets a panel. If Compiz is disabled, I get two panels (as expected), but the 100% CPU usage and Nautilus problem is the same in both cases.

Twinview is working as expected, only Separate X Screens causes this issue.

ProblemType: Bug
Architecture: amd64
Date: Mon Feb 22 21:01:33 2010
DistroRelease: Ubuntu 10.04
InstallationMedia: Ubuntu 10.04 "Lucid Lynx" - Alpha amd64 (20100215.1)
NonfreeKernelModules: nvidia
Package: nvidia-current 195.36.03-0ubuntu1
ProcEnviron:
 PATH=(custom, user)
 LANG=en_CA.UTF-8
 SHELL=/bin/bash
ProcVersionSignature: Ubuntu 2.6.32-14.20-generic
SourcePackage: nvidia-graphics-drivers
Uname: Linux 2.6.32-14-generic x86_64