Images are large-like "safe mode" large

This forum has been nothing but helpful for me. You guys are the best. Here is another question:
I recently purchased a new desktop. ACER Aspire x1700 with 2.4 Intel Duo Core NVIDIA graphics, 4GB Ram, and 640 HD. I hooked it up to my existing monitor which is a HP 17" flat screen (1024x768). However, the picture quality looks "larger"--almost like safe mode. Desktop icons are larger and not as sharp. I tried adjusting the screen resolution--but nothing. I run it at 32 bits color (thats the highest). Also, my system is 64-bit (not sure if that has anything to do with it).

Is it a graphics card thing? Monitor thing? Something I can adjust to make the imaging sharper and not as large?

Thanks.

Right-click the desktop, choose Personalise, then in the left-hand pane, click "Adjust font size (DPI)".

The DPI is already set to teh smallest. The picture doesn't look sharp, becuase everything is so big. Any suggestions?

Select the custom size and change it. I did and it worked on my laptop.

Sorry I treid that. It stays at 100%. Do you think it is a graphics card thing?

Did you try to reinstall video card driver?
Any errors in Device Manager?

Have a look nd see if there is an Nvidia control panel installed, there are some oddball settings in that thing.