from that lspci i can conclude that you have the same video card i have with the same amount of vram, 128 mbs, it is reporting 256 in my machine too
your monitor is reverting to 1024 because your xorg doesn't have more entries for bigger resolutions
it would be good that you reconfigure the video card by opening pclinux control center/hardware/configure video card/graphic card
select the option vendor/ati/radeon x1950 and earlier
in the next window set enable 3d hardware acceleration and translucency, also enable graphical interface
go back to the configure video card and in the monitor search for your monitor, if it is not present use generic and search for the maximum resolution you can do with it, if this doesn't work try monitor plug and play
if this causes you to not being able to log in to graphical desktop you can call pcc again by writing in console drakconf(as root)