The incredable shrinking singers display...

[jdavia]

it "IS" in extended desktop mode but still shows me only 1 monitor on the display propertys screen.

You need to set the display for dual screen in Properties/ settings. It is too difficult for me to explain, but if MTU hasn't, may someone jump in. If it isnt your card of the display driver, then it could be something listed below. (I hope not)

Don't act so fast as to delete your drive yet, until you do some checking.
Your problem sounds like a system resources one, and nothing to do with Hoster or the ATI card.
It may be hard for someone not knowing your particular computer to pinpoint the cause, because it can be so many.

How much memory do you have?
The use of the computer before using Hoster, The amount and type of other programs installed.
How much of your hard drive is allowed to be used for excess memory
Are other programs running silently in the background?
Do you have too many songs installed on an uncompressed drive?
Or is your drive almost full?
Does your screen shrink when you use any other program?
Do you have some icons on your desktop as copies and not as shortcuts?
A lot of questions, I know, but should be checked.
Something must be hogging the space on your drive, making less room for Hosters songs to display effectly on the full screen, therefor I suppose something in the OS reduces the window to display the file.
Check all of the above, I think any single one of them can cause what you experience.