Display too big to fit on screen

Hello All, I am desperate for some tips. I have just bought an LG 32" Flatron TV/Monitor at 100Hz. I didn't knew though, that the PC mode of this TV is only 640x480. When I increade to 800x600 or 1024x768, the screen gets too huge, that on Windows XP, by moving the mouse to the corners/sides, you can keep "scrolling" the display to its ends. I tried Hydravision by ATi (as I am using a Radeon 9700 Pro) but its not helping at all. I really would like to know (and ready to pay for any service given) how on earth I can decrease the size of a 1024x768 display to fit on a 640x480 screen. The TV/Monitor (call it whatever you want) can take up to 1280x1024 but on Windows desktop (XP) you will be able to see your first icon on the desktop (for instance the icon of My Computer) large as 32" (nearly covering the whole display)...well maybe a bit exagerated, but close. Is there any software or way, to reduce the size (not resolution) of the screen, or it is something related to one another? I am a huge fan of flight simulation, and I was fed up seeing a 19" monitor in the middle of the skies, and that's why I bought this 32". It got a port for VGA display, and also S-Video. Although S-Video can do the job quite right, its quality is not even close to that through VGA, but then again, VGA got this huge problem. To sum it up, if the screen resolution is 640x480, everything fits perfectly on screen (with a 16:9 ratio, cannot be changed), but if you go slightly upwards, 800x600, the display do not fit on screen, and on Windows XP, you can drag the windows around to see it, like working with an adobe acrobat file, sort of. Is there anyone who have some sort of explanation please? Would appreciate greatly.Kind Regards,Alex