Ah, I figured it out. I'm only taking into account the window size, not the layout size. If I set the window to match the layout size (eg. 1280, 1024) I can see the sprite being constrained to the layout.
As the layout is often not the same size as the window, it's important to note then that some actions like destroying a bullet once it leaves the layout does not happen once it leaves the viewport, but the actual layout itself. In the case of huge layouts with scrolling worlds, these events might take a lot longer to fire than you expect.
I wonder how many other people this has tricked <img src="smileys/smiley1.gif" border="0" align="middle" />
Since we don't have a Bound to Window event, I'll have to figure out another way to constrain the sprite to the viewport.