when you dive full lung or pack,versas 1/2 lung, there is much more nitrogen available in the lung to diffuse into the bloodstream. More nitrogen into the bloodstream = more narcosis. At least that is the theory as I understand it. Maybe also, lower lung volume means less surface area for gas to diffuse across.
Mmm, I'd be interested to hear an account of why that might be the case. Given ppN2 is the same regardless of lung volume, and only a small fraction of the available volume is ever dissolved, the only remaining variable is surface area, as you say. I'm not too sure about that being a limiting factor either but might have a trawl through Trux's site to see if anything's said about it....
I reckon the reduced narcosis you get with FRC might simply be due to the lower CO2 production. I get very narked on inhale dives but I think that might be because of the extra energy expenditure I need to overcome the buoyancy change that comes with high lung volume. Unfortunately I haven't done any deep FRC dives so can't compare.