First, make sure you are using the updated drivers from ATI for the x1300. They can be found at: http://support.amd.com/us/gpudownload/windows/Legacy/Pages/radeonaiw_xp.aspx?type=2.4.1&product=220.127.116.11.13&lang=English
Once installed, you should be able to enable both displays in CCC. You will also need to set your primary display and extend the desktop in the dekstop properties in Windows.
Since you are seeing the flash screen upon boot, you have a physical conenction, now you just need to tweak the driver/Windows settings to take advantage of the 2 monitors. You are almost there.