The game looking horrible can be caused by having AA on. It blurs it in a brute force, "no pixels here, folks!" kind of way. Try turning it off or using Nearest Neighbour instead. Unless you just don't like the pixels in general, in which case windowed mode probably is the way to go. Also, if you have a widescreen monitor, it might be getting stretched horizontally. Mine does that unless I use a hack for my ATI settings (Nvidia users can just use the actual settings of their video card, the ATI settings suck).