One option would be a better monitor.
Your showing a Windows screen shot, but you are not booting to windows so the setting in windows should have no impact.
The Linux CD is detecting that your graphics can run at higher resolution so shift to the higher value, unfortunuatly your monitor cannot.
There should be an option to boot into linux text mode and modify the screen resolution. (but I am not a linux guy and can't tell you how )
maybe this information can help to someone to help me:
manual for HP L1950 19-inch LCD Monitor:
Native Resolution 1280 x 1024 @ 60 Hz (analog)
1280 x 1024 @ 60 Hz (digital)
Max Resolution (Analog) 1280 x 1024 @ 75 Hz
Max Resolution (Digital) 1280 x 1024 @ 75 Hz
Preset VESA Graphic Modes (non-interlaced)
640 x 480 @ 60 Hz, 72 Hz, 75 Hz
720 x 400 @ 70 Hz
800 x 600 @ 60 Hz, 72 Hz, 75 Hz
1024 x 768 @ 60 Hz, 70 Hz, 75 Hz
1280 x 1024 @ 60 Hz, 75 Hz