Can't get LCD HDTV to display sidesceen thru DVI

Hello

I have a nice 27" LCD tv which is HD ready and goes up to 720p or 1080i. i want to use it on my PC to watch movies and play games.
Not to bothered about splitting the screen for a workstation type set up or anything.

I have a Radeon 7000 graphics card with 64mb, and a DVI output.
Before buying the DVI cable I played with the graphics card settings and it allowed me to change the res of monitor 2 (the lcd tv not yet connected) to 1280 x 768 which is a widescreen format, and happens to be the native res of my tv.
The settings for monitor one, my 17" tft are left at 1024 x 768 as it is not widescreen.

But when I got the DVI cable and plugged it in, it reset the res of monitor 2 (the lcd tv) to the same as the tft, thus giving a square picture, or a stretched one in 16:9 mode on the tv.

Whay would it do this? When the tv is plugged in and turned on, the only oprions for it are 800x600 ot 1024x768, there are no widescreen options.

Any ideas how to set this up, do i need some software, new graphics card?????

I have connected the two.