I develop on a laptop running Vista and dual monitor. I set the monitor to be the main screen and laptop's LCD panel to be the secondary monitor. When I try to run my game full screen it shows the bottom right 1/4 of the game in the upper right 1/4 of the monitor. I have seen this same behavior on several comericial games, specificly in earlier versions of WoW; later version work correctly. 

I used to think that it was a problem with my system but three Vista laptops later it is still the same and commericial games are able to make it work.

Has anyone else seen this type of behavior?

Does anyone know how to fix it in an XNA game?

you sure you have the latest drivers for your graphics card in your laptop?  I've never heard of a fullscreen window only drawing 1/4th of it.  You may be trying to set a resolution that your monitor doesn't support.  Pick a resolution your monitor supports (you can check in the Display Properties in your control panel) and see if it still happens OR just use 1024x768 and see.  Most monitors now a days that's the default resolution.