Color dither in Photoshop

[Oaklodge]

I have a strange problem when I use Photoshop CS3.

I'm using Vista with SP1

When I have an external monitor connected (NEC) and I click the color picker in Photoshop I get a Continuous tone picker without any blocks.

However when I'm using just the laptop LCD I get block of color (I'm fairly certain that this is a new thing)

Vista reports that I'm running in 32 bit color.

Any ideas please ?