Emulate fake monitor on Windows 7?

The free product ZoneScreen may work for you:

ZoneScreen is a tool for extending your desktop workspace using displays of network connected computers or portable devices like Pocket PC.

ZoneScreen consists of two parts: kernel-mode ZoneScreen Virtual Display Driver which is visible to Windows just as normal video card with monitor attached to it, and user-mode ZoneScreen Wizard which is responsible for capturing image (running at server side), transmitting it over the network, and drawing it at another computer (running at client side).

There is also a similar but commercial product: MaxiVista (US$39.95, trial available).

You can create a dummy plug (in just 30 seconds) and Windows will think it is a monitor.

This is not applicable with digital only cards (no VGA or DVI-I)

There are programs to create a 2nd monitor on other devices, such as another computer, or an iPad:

http://www.ngineer.net/technology/using-my-ipad-as-a-second-monitor-for-my-windows-laptop/

If you have an iPad, fine. Or, you should be able to connect to the VNC server from the local host via a VNC client. (connect to localhost:5902) Now the "second monitor" would be in a window on the local machine you can close or display as needed.