I have the exact same problem!
I have a Macbook 5,2 and OS X 10.5.8.
I want to connect it using a Apple Mini-DVI to S-Video/Composite Adapter. When I connect the adapter, the screen turn blue(like normal), but thats all that happens. I took it in and the guys in the workshop changed the Logic board, but that changed nothing. So it must be a software thing.
Can anyone help?