I was reinstalling my HP nc6000 laptop after putting in a new 100Gb drive and went through the process of installing the latest ATI Catalyst drivers for the standard Radeon series (v6.11 for Windows XP Pro, desktop version) and there are finally options to rotate displays, including proper support for rotating either one or both of my desktops. Handy, as you don't want to rotate the LCD panel on the laptop, but the rotating the external monitor is really handy. I love editing Word documents in A4 (portrait format).
So I unininstalled my Pivot Pro software I was using, and also ATI Hydravision as the latest Catalyst driver seems to handle the configuration of outputs now.
Eagle eyed surfers will have noted that I have installed the desktop version of the Catalyst drivers. These can be installed on laptop thanks to the modification tool available at driverheaven.net (although it was the previous, v3, version I used today). Basically this utility allows the standard ATI desktop catalyst driver to be installed on a mobility Radeon laptop graphics chipset. It is quite possible that the screen rotation functionality is only present in the desktop version.