Ok, how's this?
I just just my computer display to 1280 x 960 and I got the exact same problem you reported. I have my display normally set to 1280 x 1024 and I don't have the problem.
I suggest you keep trying different display settings until you find something that works. I think it's possible that your machine is old enough (and -- how shall I put this

-- not one of the more upscale Mac brands) that your video card is a limiting factor. So you may not be able to get the best result, but I would think you'd find something that at least showed the entire OOTP display.
Hope that helps.