If its hardware I wouldn't know where to begin but I would suggest plugging in an extra monitor and reboot... see if the red outline is on the external monitor and if it is, then it is probably software related.
If it is software related, the forums here can probably help you find a solution. Possibly reinstalling the drivers or system files will solve your problem.
NOT SURE IF YOU GOT LAST MESSAGE.
I was fortunate to have 3 monitors available to me. The strangest thing happened though.
The Sony monitor initial IBM screen was black like it's supposed to be. The desktop no longer has the red frame, but the picture is not clear at all. Before Win 98 finished loading, it recognized the new monitor and supposedly installed a driver for it.
The Compaq and Dell monitors had a black initial screen also, but nothing at all came up after that (the screen was black). When I removed the monitors, the laptop went back to it's own screen and showed that Windows had stopped with a box saying new hardware was recognized (I assume the monitor), but it didn't load the drivers or even go to the desktop.
To correct the initial problem that I had, I formatted the hard drive and did all the extra things you have to do to install Win 98 to the IBM 600E. I even reinstalled the extra IBM drivers 3 times (especially the display and monitor drivers).
So could it still be the driver or system files?