How much are you paying?
No really, it has nothing to do with OS. Your video card (or lack of one) will not support that resolution, therefore you either need to buy a video card, or lower your resolution to one that your system can handle.
Just because the monitors resolution is 1920x1080, you dont need to run it that high, although that will produce the best picture.
I find it odd though that a 21.5" is native 1920x1080 because I have a newer Acer 22" and my native res is 1680x1050.
Thank you for this message, it's my Christmas present, i just got it today.
so, i will go to Best Buy to get Graphic Card and have them to install it for me, hopefully it'll solve my pictures' display problems.