Easy when you know how. Dhhhoooo...
This works for XP, Vista and Windows 7
Ok I admit it, I've been using an additional monitor for quite some time now: certainly months. I now have a neat little stand that the external monitor sits on. I have become quite adept at moving the mouse around the end of the display and have it appear on the monitor above: almost without thinking.
I had found the 'extend the monitor onto this desktop check box. No problem there. The problem was that with the display there just was not enough space above the number 1 display for number 2 to fit and to to align the monitors vertically?.

This is how:
Plug the external monitor in.
Right mouse click on the desk top.

Select personalize settings

Click on the second monitor.
'Extend the monitor onto this desktop'
Mouse over the second display: press the left mouse button and holding it down, drag the second monitor to the (small) space above the first. Release the left mouse button (drop).


Click apply!
I have noticed that this seems to use a bit more memory than side by side displays: I could not paste the full (print screen) display into Paint. I got an out of memory error: but that could be Paint!
Happy viewing.