As you can see from the xrandr output, your graphic card isn't recognised as having this mode (1024x768)
Fire up konsole again and run the following commands
This will output the information regarding your screen with this resolution. The second line will begin with "Modeline". Copy the contents of the second line beginning with the resolution (so, anything after the word Modeline.
Just in case: ctrl+c/ctrl+v don't work console. Instead you have to use ctrl+insert/shift+insert or the mouse).
2. Create the new mode using the information from step one and the command "xrandr --newmode". For example:
3. Add the new mode:
xrandr --newmode "1680x1050_60.00" 63.50 1024 1072 1176 1328 768 771 775 798 -hsync +vsync
4. Now try to use the new mode:
xrandr --addmode default 1024x768_60.00
and hopefully your screen will change to the correct resolution. This is only temporary until you restart X. There are ways to make it permanent, but let's make sure it works first.
xrandr --output default --mode 1024x768_60.00