Right now I have a 1600 X 900 and I was trying to watch a DVD from redbox and it said it was in 480i. I am contemplating if I should buy a 1080p laptop if that would fix the problem. It only looks good on my laptop when it is just a small box but I want to watch movies in full screen mode. My 6 year old laptop plays movies crystal clear and it is an HP, I have a dell inspiron 7720. I also have a 2gb Geforce GTX 660m video card that came built into the motherboard. Should be no excuses for the quality.
When you blow up a regular DVD to high res, it will pixilate and may look pretty bad unless you have a good video player, video card and monitor that can scale well. Your 6 year old laptop probably has a lower resolution or better scaling. A higher res laptop will just make things look worse unless it happens to have a better screen as well.
It's like taking a 1 gallon bucket and dumping it into a 2 gallon one, but making it occupy the whole space, the water will be more like foam as it expands, which is what is happening to the video, it's using 2 or more pixels per one for the video once you expand it to full screen.