It may be that you will need to modify the xorg.conf file (this file
shows all the display resolutions
available as well other things) to add "1024x768".
Remember to make a backup of this file first just in case.

In a shell type:

sudo cp /etc/X11/xorg.conf /etc/X11/xorg.conf_backup

gksudo gedit /etc/X11/xorg.conf


Now scroll down the file do you see "1024x768" mentioned???