Windows 7 fails to detect the native resolution of LG Flatron W1934S

The most likely reason is that the EDID data of your monitor is corrupted or not transferred correctly.

EDID tells your system which features the monitor has and which resolution it supports.

First check if there's anything which could prevent the EDID exchange: Broken cable, damaged connector, VGA-DVI adapter, one-monitor-two-workstations switch, ...

You could try to completly disable EDID for your monitor, a quick Google search revealed that this frequently resolved similar problems for other users.

If this can't be done with the driver software, a last resort would be to disable the pins responsible for EDID on your DVI cable.

Taken from: http://www.overclock.net/ati/47962-way-disable-edid.html

However do be careful: do your own research first and best try with a separate DVI cable first.

Solved in the most unlikely way : used a different VGA cable. Apparently somebody used my monitor (without my knowledge) and used their own (defective) cable and left it there. I found back my original cable and plugged it in, in place of the defective one, and everything went back to normal in literally a second.

I got a hunch that the trouble might be the cable when I was poking around the (labyrinthine) Windows registry and found that the Intel GMA detected my monitor as "#-" instead of "Del003" as it usually did and the Serial Number of the monitor could not be read. (Also thanks to Ivo too for mentioning "cable" which triggered something in my mind.)

This condition was probably caused by the graphic card not getting the right EDID (Extended display identification data) from the LCD Monitor. Since the monitor is fine, I looked at the cable more carefully and noticed it wasn't the original one.

This incident has wasted hours of my life, but oh boy what a lesson. A lesson hopefully no one else has to endure.

:-)