I encountered the same problem after upgrading from 6.10 to 7.04 using the 
Upgrade on Adept Manager. I tried tuning the monitor's own controls as you 
mentioned, but the total visible area stays the same and the visible area 
(although within my monitor's size), still doesn't show the full desktop 
screen. When I move my mouse to the far right, then the the screen scrolls over 
to the offscreen part.
My monitor can handle 1024x768, on which it is currently set, using mga driver 
for my Matrox Millenium II graphics card.

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Desktop size larger than display
https://bugs.launchpad.net/bugs/108484
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