Resolution issues on new TV

Hi folks, long time lurker first time poster:

I recently purchased a 40" TV, it was very cheap and a brand I'd never heard of, so it wasn't so surprising when I unpacked it to find the stand was damaged (scratches) and there was a small cluster of dead pixels in the lower right corner of the screen.

So that's being picked up soon, and I've since ordered another cheap-o tv, the brand is Finlux, it's a 37" screen which claims to be full 1080p

If I run a movie through the USB interface (on a flash drive) it displays in 1080p, if I run my PC through it on HDMI, it's again 1080p, but the image quality is very poor through this method.

I want to run my pc through it via VGA with separate outputs from the pc for the audio, but for some strange reason, the maximum resolution I can achieve on this TV via VGA is 1360x768

I'm sure this has nothing to do with my graphics card, as I was able to get full 1080 on the 40" tv via VGA, so I'm totally baffled as to why this TV has issues with the same output.

System info:

CPU: intel i5 2500k clocked @ 4.9
Asus P8P67 Deluxe 1155 motherboard
Nvidia GTS 450 (outputs = 2x DVI + 1x mini hdmi)
Windows 8 Pro

I have an adapter from MSI which converts the VGA to DVI, which came with the MSI GTS 450.

This adapter is the only thing I can think is causing a problem, but considering it worked fine on the 40" TV I'm returning, I'm not so sure.

Any help much appreciated!

Edit: Forgot to add model details.

Finlux 37" Full HD TV - 37F501 - http://www.finluxdirect.com/all-tvs/37-inch-lcd-tv-full...