For what little it's worth --
Dell Dimension desktop / 128 MB RAM
Dell 17" flatscreen monitor
NVIDIA GeForce 256 graphics adapter
Win 98
-- no matter what screen resolution I select via the "Active Desktop", I get the exact same resolution (1024 x 768) albeit without any funky black borders.
-Oz
EDIT1:
The Infogrames FAQ lists the following options re: Resolution/Color Depth combinations (Win98 - and the XP section specifies that it lists only changes to the Win98 section, of which I can't find any that are relevant ...):
640x480 with 256 colors.
640x480 with 16-bit color.
800x600 with 16-bit color.
1024x768 with 16-bit color.
Looks like 1024 x 768 is as good as it gets ...
Edit2 -- you are running DirectX 8.1+, yes?
-- BTW, I'd personally be happy to go along with a campaign of bombarding them with tech questions re: this issue (we could all get Zulu armbands or something J26-ish

) if this sounds at all helpful ...
*sigh*
-Oz