Default behaviour of my GF6600 when I had two screens was that fulscreen apps ran in the primary screen only and the secondary displayed whatever was there before launching fulscreen app. You won't be able to work with the windows desktop without LFS losing a focus and therefore responsiveness to user input. (it's the same as if LFS ran in a window and you clicked off it)
If you run LFS in a maximised window (in windowed mode, not fullscreen) on one monitor, you can still do other things on the other one.
LFS will still be visible but will loose focus, so you'll have to select the LFS window again to use the mouse/keyboard with it. Game controllers should work regardless of whether LFS has focus or not IIRC.
Can be done using two computers (one for LFS, one for other stuff) running synergy to be able to use the same keyboard/mouse on both. Of course, that's only helpful if you have two computers...