What exact display/monitor model do you have? Does it support more than 1920 x 1080 as a resolution?
As your monitor has a native resolution of 1920 x 1080 pixel, that will not really work, as there are only 1920 x 1080 pixel to use, and you want to have the same resolution on a smaller scale.
In other words you would like to just use 1600 x 900 pixel (or any other pixel) of that screen to display 1920 x 1080 pixel, so that there is a black border around the screen? As far as I know, that is not possible.
I think I misunderstood as it seems.
So you have a 1920 x 1080 capable monitor, but System Preferences doesn't allow you to change to that resolution? I thought you have a 1920 x 1080 monitor and want to display 1920 x 1080 pixel, but not on the whole monitor.
Have you checked System Preferences > Displays > Arrangement and deselected MIRROR DISPLAYS?
What exact model of a Mac with what Mac OS X version do you have?
Well now I just want to get my monitor set to 1920 x 1080 but It is not showing in available resolutions :/
27" iMac 10.6.3
So in other words, MIRROR DISPLAYS was/is deselected?
Or is it not?
Has a restart or unplugging/plugging back in helped?
Or is this working:
http://support.apple.com/kb/ht1379
http://support.apple.com/kb/HT3964