Dell 3007WFP at Full Resolution Blockiness

I set up a Asus Essentio CG5290 with Snow Leopard 10.6.2 and it works beautifully with dual monitors at 1024x768. I tried connected it to a dell 3007WFP and it works up to 1900x1200 resolution but if I switch it to 2560x1600 the text and graphics become incredibly blocky. I was wondering if anyone else has encountered this problem before and whether or not there is a fix.

My specs are:

Asus Essentio CG5290
Intel Core i7-920
9 Gigabytes Ram
Nvidia 9800GT 1GB

Has anyone else had this problem before?