In 800x600 resolution, the desktop becomes smaller than the size of the screen, leaving a thick black frame around it. In 1024x768 it takes up the whole screen.
These are the two available resolutions.
I'm using an IBM ThinkPad R40.
OS: Windows XP Professional SP3
Display adapter: ATI Mobility Radeon 7500
Display driver version: 22.214.171.12447 (6.2.2007.)
In device manager, these are listed under the Monitor tab:
IBM ThinkPad 1024x768 LCD Panel
I have one newer display driver (126.96.36.19905 from 2009.) but the installation of it gets interrupted by the following error message:
"Setup did not find a driver compatible with your current hardware or operating system."