"This is my laptop: S10-3 (10" netbook-not touchscreen)http://shopap.lenovo.com/SEUILibrary/controller/e/phweb/LenovoPortal/en_PH/catalog.workflow:category.details?current-catalog-id=3634951826AE4D3881BFFF1AC5FCD957¤t-category-id=4E3246DAA5444C7F80603EE84E02F931&tabname=Gallery#tabstart
i already understood that it is not the touchscreen model, the no touch and the touch has the same hardware, the only difference is that one has touchscreen and the screen can be turned 180 degrees to become a tablet pc
"So 1024 x 600 should be the max resolution for this hardware? Or what else can I adjust here so I can get the best resolution?"
the maximum resolution for that screen is 1024x600, it was designed to work that way
if that is what you have now, it is working correctly
the limit is not the operating system or the video card, the screen itself was designed to work this way under this circumstances
if you want more resolution you are going to need a external monitor or a new netbook with a newer screen at 11" so it works a 1336xsomething
"As you can see, my icons and window are quite huge. I even use the horizontal scroll bars in my browser just to view a web page in full"
about the size of the icons, please post a screenshot of what you see to be sure to understand what is going on, you can use postimage.org as free service to upload screenshots because here i have everything properly at the right sizes, share a link to a image you uploaded
in pclinux control center/hardware/configure video card verify that the system sees a screen capable of that resolution, on my netbook it says that it is a flat panel 1024x600 on the monitor section and in the resolution 1024x600 24bpp
in kde control center(also called configure your desktop)/hardware/display and monitor/size and orientation a lvsd1 at 1024x600 at 60Hz
"ATI is the software / graphics software PCLOS has installed when I updated my repo"
the drivers for nvidia and ati comes preinstalled if someone needs them but that doesn't mean that the system is going to use them with the wrong hardware, the intel drivers are usually detected and set correctly without the user intervention
"I even use the horizontal scroll bars in my browser just to view a web page in full"
this is normal for such small screen when viewing a big page, remember that a netbook is small in many ways