It sounds like the game isn't getting 1280*720 returned as a supported resolution unless your desktop is set to that.
Try creating a report.zip file using the D:OS EE Analysis Tool
. Extract the zip file somewhere, run the AnalysisTool.exe, browse to the install folder if it is not automatically detected, and generate a report (it will be saved in the same location as the Analysis Tool).
Inside the zip will be a DisplayAnalysis.txt file listed the supported resolutions.
Check for updated video drivers, and (if possible) an updated inf file for your monitor (or one specific to your monitor, if Windows is just listing it as a generic PNP monitor).