I have a similar problem, although not as bad as some of you have.
I have a laptop computer with an extra display connected through a KVM. Switching between displays works perfectly. The problem is that the laptop now and then turns off the extra display and moves all windows to the main display. Just one second later it seems to rediscover the extra display and turns it on again, with all windows moved to the external display. This happens every few minutes, very randomly, sometimes only 10 seconds apart, sometimes 5 minutes or so between the blackouts.
The problem is only with Windows 7, not XP.
There is no problem when the monitor is directly connected to the computer.
The switch does support EDID according to the specifications.
In the Event Viewer, event 43029 is logged every time the screen blackouts; message "Display is not active"; source "atikmdag".
Hardware: KVM Aten CS1734B, graphics card ATI FirePro M7740
OS: Windows 7 Profession 64-bit