Everything else works fine. It loads fine but then the HDMI connection drops and it goes to the Laptop screen. I've looked through settings and can't find alternate display methods other than Display #1 and Window mode.
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This seems to be an issue with XBMC full screen mode. There are people recommending to start XBMC in windowed mode on the secondary screen to then configure Compiz to not draw windows decoration there.
I would like to discourage you from these rather crude measures as you have a rather good chance to accidentally ruin your desktop on your main screen.
What I do now is to set my TV in "Mirror displays" mode from System Settings -> Displays (e.g. see: Resolution and screens not detected properly). By this XBMC is identically displayed in full screen mode on both screens.
This of cource will only then work flawlessly when both, the screen geometry of your laptop, and the screen geometry of your TV are the same.
In XBMC (or Kodi, as it's now called, open it) go to SYSTEM on the right side end of the on screen list. Click SETTINGS underneath. Then select "Settings" and once there change the "Settings Level" to Expert by clicking the Setting Level area twice. Select "Settings" then "Video Output" and change to video device to your HDMI output (you can also block the other screen unless you feel you may want to use as much in the future).
I am certain this will absolutely solve your issue (as I have experienced it myself and resolved it this way).
If my answer enables the resolution of your issue then please press the up arrow on the left of my post [where there is an up arrow above a number above a down arrow and all others whom this helps should do the same] as it provides a benefit to my and your status on the website for you to do so) or mark it as "Answered" or "the answer" if possible.
If you would rather see as much by video, please ask me and I will create a video showing as much with my HP Notebook and TV by HDMI [I would be using an Asus monitor instead, but computers generally are not concerned if the HDMI device on the other end of the cable is a Television or a Monitor with speakers such as my Asus monitor].