Is there any way that my Motorola Droid can be used as a second monitor for my PC?
As a monitor? Not exactly.
However, you can set up a VNC server on your PC and use your Droid as a VNC client in "read only" mode. This would display your monitors output on your Droid without interfering with the mouse/keyboard of the PC. The connection needs to be over wifi, preferably on your home network. But there would be a little lag though.
TightVNC (VNC server) works well on Windoze and the Android Market has tons of VNC clients to choose from.
LOL Thanks for questioning why I would want to be squinting at a screen that small. But remember there is a magnifier with windows ;-). I want it because then I can see map online or a guide of a game I'm playing without having to Alt+Tab every time. I would love the Logitech G19 keyboard but that's to f'ing expensive.