Having the exact same problem, but on a different laptop model and driver, but also only started very recently and with Windows 10 x64.
In our case we have a Lenovo Thinkpad T430s, originally with Windows 7. We installed Windows 10 x64 almost a year ago, and we've been able to extend the display without issue to our external monitor, while the primary display is still on the laptop.
For some reason about a week ago this stopped working. I did not install any new driver. When trying to extend the display (Fn+F7) on Windows 10 a side bar pops up titled "PROJECT" and says: "Your PC can't project to another screen. Try reinstalling the driver or using a different video card."
The currently installed driver is for NVIDIA NVS 5200M, driver date: 2/27/2018, driver version: 23.21.13.8908.
I ran Lenovo System Update, which states there is a new driver ("Thinkpad Video Features (NVIDIA Optimus / Quadro) - 10 [64]", driver version: 23.21.13.9125. However, when I try to install the driver using System Update, although it says it has downloaded successfullly and installed successful and calls for a reboot, after reboot the version still shows the old one. I tried this multiple times without success.
I even tried to uninstall the current driver (and delete it from the system) and when I do so it now shows driver 22.21.13.8299. I try to extend the display. Same error as I mentioned above. I then try to reinstall the newest driver with System Update and it still doesn't work and after reboot shows the driver version hasn't changed.
I unstainlled that last driver as well and used 22.21.13.8205. Same: extend doesn't work and reinstalling the newest driver doesn't work.
I know this isn't a hardware issue with the laptop because if I go into the BIOS, I can change the display to use VGA instead of the default display, and the laptop information appears on the monitor. When Windows loads up and I login, it's showing on the mointor as the primary display. However, if I try to extend the display, again it doesn't work and comes back with the exact same error: "Your PC can't project to another screen..."
I know this isn't a hardware problem with the monitor because I can extend the display of my Lenovo W541 without issue to this same monitor.
I even tried using the Mini Display Port on the back of the monitor, and the error is the same. Again, I can go into the BIOS and tell the laptop to go through the Display Port and it works and sends the view to the monitor, but it won't extend to the laptop.
This looks 100% like a driver problem. However, Lenovo's latest driver doesn't appear to allow me to install it, and so I have no idea what to do next. EXTREMELY frustrating, especially since this worked 2 weeks ago without any changes what so ever.