Check that all the wires are connected properly, try re-plugging every connection. If that fails, try a different cable and a different computer - that should give you some idea of where the problem is (screen DVI port, DVI cable, or computer DVI port).
From the information you provided, it seems unlikely that it's a problem with the computer's software or the screen's electronics.
Yo have to understand, what is hardware pixel and what is software pixel. The resolution, that you are setting in display settings, is just a conversion parameter.
The monitor screen size (17" for example) has fixed number of hardware pixels, which equal the maximum resolution of this specific monitor. One pixel in harware is one dot, that can have any color. When technologies evolve, the number of pixels that can be put into one mesurment unit grows: smaller and smaller pixels, like bigger and bigger screen sizes, gives more pixels = bigger maximum resolution. As with more pixels you can see smaller details of an image on screen.
The monitor allows you maximum resolution, your OS detects that and gives you only those resolutions that are allowed by monitor. If you give smaller software resolution than your monitor can handle, the video card simplifies the image going to the monitor. For example, making 4 pixels (in square), show the same color that 1 pixel of your image contain. The lower the resolution, the more pixels will be "unused" - marked with same color.
The image [typically] contains a fixed number of pixels - the same as your monitor. The size of pixel depends on monitor. So, if you have 1600x1200 screen, but are running at 800x600 resolution, your 800x600 image will show twice as large as it would be if viewed on 1600x1200 resolution.
If you view an image, that is 1600x1200 on 800x600 screen, you will see only 1/4 of it on screen. If you zoom it out, to make it show fullscreen, you will see all of it, but it will be simplified - the pixels, depending on ratio (in this case 1/4), will have calculated an average color/brightness from 4 pixels of your image, giving you and average color, from each of 4 pixels (in square) into 1 pixel on screen.
There are chains on which maximum resolution depends on - monitor screen size, pixel density for that screen, graphics card output possibilities, operation system output possibilities. If any of latter fails to support your monitor maximum resolution, you will not be able to us it at its full potential.
Best Answer
There is very little you can do to repair LCD monitors. If it is still under warranty you should replace it or have it repaired, otherwise, the cost of repair will probably be more than the cost of a new monitor.