Macbook Air not detecting correct external display resolution

My Macbook Air stopped detecting the resolution of my external display this morning and I'm not sure why because it was working fine last night. My display is 24" 1080p and in the past whenever I have connected my monitor to my Macbook, it's just used the 'Best for Display' resolution. Today though, this automatically defaults to 800x600 and looks like the picture on the left. Then when I change the resolution to 1920x1080 it looks like the picture on the right (click to enlarge).

Things that I've tried so far:

• Rebooting the MacBook
• Disconnecting and reconnecting the Mini DisplayPort
• I've tried with another computer (Windows) and it displays fine.
• Resetting the settings of the monitor and doing and auto adjustment.

The fact that it's limited to this computer means that it's not the monitor, I'm wondering if there is any way to reset the display/graphics controller or something? Thanks.

Solution 1:

With the Display pane of System Preferences visible, hold down the Option key and the "Gather Windows" button in the lower right should turn into a "Detect Displays" button. Click on that button and your computer should take care of the rest.