Having trouble with DVI connection

Hey,

I purchased a new monitor from Dell 23", it supports 2048x1152 resolution. The thing is I first had it connected through VGA, and was getting the optimum resolution. But since I have moved my 360 into my room, it acquires the VGA input. So I connected my computer to the monitor through DVI.

The problem is that through DVI I cannot achieve the optimum resolution, likely because of my old graphics card. But the thing is, the computer has set the resolution at 1920x1080, which is a 16:9 resolution. So the monitor should be able to scale to it. But instead the image becomes stretched and exceeds the monitor viewing area. Moving my mouse over to the ends lets me see what I couldn't before, like slides over.

The weird thing is the monitor in its menu states the resolution is at 1280x1024, while the monitor settings on the computer is actually set to 1920x1080. I think this is the problem, maybe some communication problem between the monitor and computer through DVI?

Hope someone could help me out with this. If it helps I am using the DVI wire that came with the monitor, which is a DVI-D Single Link.