i have it on mirroring, and the resolution on the 2005fpw is on 1680x1050 but the image on the screen is 1024x768, it isn't stretching to fit the screen.
You are mirroring (exactly copying) your 1024x768 display in your laptop to the monitor. You have to turn off mirroring to get full resolution on the 2005fpw. If you don't want full resolution but merely want to stretch the 1024x768 image, there should be an option for that in the monitor's menu.
To stretch the screen using 1024x768, hit the Main Menu button on the front of the screen itself, then go down to Image Settings, then select Fill from the Scaling option.
You can't plug an iBook into an external monitor in anything but mirroring mode (you will see the exact same image as on your iBook) unless you download and install Screen Spanning Doctor. Then you should be fine.