You seem to have a bunch of interrelated things going on

Thanks for the reply Just17.
I haven't got this sorted in PCLOS. The main problem is that the new 12.x series ATI drivers are mucking about with the primary display. What really burns me is that the KDE System Settings utility won't save my working configuration as default on boot/login I have to set CRT1 as the primary display every time. Grr! Now I've just learned that AMD has relegated 4000 series cards to "legacy" status so I'm stuck with Catalyst 12.6 from now on I guess.
I suppose it is selecting the cards primary output by default ...... so is it possible to swap the display connections to the card?
The Flash Player problem has been the only real thorn in my side since the PCLOS2010 release (I think that's when it started). So I've had just about every ATI driver/Flash combo since then, tried every setting i could think of, and nothing I could find works on my system. I can get full screen flash video, but it's slow, jerky, tears, freezes, and no matter how many times I press escape or click the shrink icon I can't get the video to return to normal size without killing firefox.
Regarding Flash .... there are two versions in the repository.
The older one did not have the 'smurf-look' problem and should therefore allow hardware acceleration which might help with your problems.
When using the newer one, and if hit with the 'blue' tinge on video, the fix is to turn off hardware acceleration.
Also you should disable desktop effects if getting display problems, to see if you can find some combination that is acceptable. Later the desktop effects can be turned on again to see what effect they have.
I hope you find a combination that works for you

BTW .... don't forget about the ATi configuration GUI from the repository .... there might be some settings there that could help.