weird resolution and death of router

Hello. I reformatted another laptop with xp pro. I used my connection. I let windows decide the best resolution and I checked - it is set to 800 - but it looks like this (but standard windows theme): http://www.quickbase.com/up/8q9jbnau.../va/screen.jpg

Also, in the middle of windows update the connection just died on both machines. I have to bypass my router. I had emule running as well. Is my router broken or need to be reset? D-link 614+

Thanks for your help

edit - nn -just needed video driver update