AbbysFamily explained it pretty well... just as an alternate way of phrasing it, here's how I'd put it.
With the laptop off, plug in your monitor. Leave the laptop screen open and turn on the laptop. You should see basically the same thing on both displays as it boots and goes into Windows.
Right-click an empty part of the desktop and click Properties. This takes you to the Display properties. Go to the settings tab and you'll see a "1" and a "2", with the "2" grayed out. Highlight it and check the "extend my Windows desktop onto this monitor" box and click Apply. OK that the changes are fine.
You will probably want to play with the resolutions while you're there. Most 17" CRT monitors are happiest at 1024x768, bigger ones or LCDs may have different sizes. (I run my 19" at 1280x1024 for example.) Any LCD displays, like your laptop or an external LCD, have a native resolution that looks best, it's a good idea to stick with that setting.
You can drag around the monitors in relationship to each other however you see fit - even on top of each other. Obviously you want them to more or less mirror how they're positioned in the real world. Once you're satisfied, click OK and enjoy your new dual monitor setup.
If you want to get fancier, you can change the primary monitor or drag your Start button from one monitor to another.
To answer Jann's question (and also the 2angels one), the dual-monitor setup behaves like one really big monitor - usually one really wide one (since generally they're set to side by side.) For example, if you have two 1024x768 displays, you basically have one giant 2048x768 monitor, as far as Windows is concerned. (To a point - if you maximize a window, it still stays on just one display, not both.) The setup is really great because you can have more windows open without needing to flip between them. For example, you can leave e-mail open in one window and your web browser in another. Or Photoshop on one and another photo (via a viewer like Irfanview) on another. Or have a DVD movie playing on one monitor while you work normally on the other.
Handicap18, that should work fine. You could even play HD content from your PC on the HDTV if it's fast enough (usually ~3gHz or faster.) You'll probably want the CRT to be the primary monitor. Most apps will remember what monitor they were on last, so a DVD app will generally still start on the big TV if you use it there primarily.
The only trick is that I know some early HDTVs were pretty PC-unfriendly, and wouldn't display a pixel-for-pixel PC desktop. I think newer ones are better but I really haven't been paying attention. You might want to do a quick Google check on your TV model to make sure that no one's been having any problems with that.
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