The iBook, although it has a mini-DVI port, does not support two-display mode natively. Instead, it only supports mirrored-display mode (where both displays show you the same image). When you attach an additional display, the Arrangement tab does not appear in the Displays system preference pane.
This is the normal operation of the iBook. However, there is a hack called Screen Spanning Doctor that makes this work:
http://www.rutemoeller.com/mp/ibook/ibook_e.html
DOWNLOAD:
http://www.rutemoeller.com/mp/ibook/ScreenSpanningDoctor.dmg