Firefox doesnt want to maximize my windows with external monitor (Ubuntu 7.10)

I am currently running Ubuntu 7.10 on my laptop (Dell D630) with an external monitor connected (Dell E207WFP). I cannot figure out why Firefox or any window for that matter will not maximize. The screen resolution that i am running is 1680x1050, which is working well, however, all windows will not maximize to that. Please see my screen shot http://ectweb2.cs.depaul.edu/wburn/desktop.png

Is this a bug? Am i not setting something up properly? The funny thing is that i am able to move the window the middle of the screen and maximize it, but once i click into the window it goes right back to the smaller resolution. It seems to default to 1024x768 for any window. Any help on this matter would be greatly appreciated. I can post any config files you need to lend assistance too. I have posted this question to the community, IRC help #ubuntu and exhausted www.google.comw with no luck.

Thanks a lot

Bill