I found this on magnetometer calibration:
Basically, you need to calibrate the compass. Have the raw X and Y data display on the serial terminal.
rotate the compass to find the max X value, then rotate the compass 180 degrees and note this value. Also note the value of Y at this point.
You need to offset the raw X and Y values, so that the magnitude of max X and Min X are similar. You also need to have the Y value near zero, as the X value is near its max or min value.
Same goes for X , as Y is near it's min or max value X should be close to zero. Just keep adjusting the offset so you get as close as possible.
One problem is that the Y-value doesn't change much when i rotate the magnetometer about the Z-axis. The X-value changes from approx. -40 to 220, while the Y-value changes from -380 to -400. Is this normal?