Best setup for the best scenery while flying

I am new to this slight sim but would like some general information about setups.  I am using a old Dell XPS running Vista and the install went fine.  I am using an old samsong tv as my display. Its a 40 inch 16:9 1080i display.  My graphics card is a AMD and I am real happy with the cockpit  display instruments are real clear and sharp.  While I am flying and looking out front the scenery is pixeltized that is undtil I get very close say to an airport or downtown then they clear up but not sharp. I realize I dont have the latest and greatest and have been trying to switch some sliders and get the best display.  So question number one is this normal and I am expecting too much for out the window distance pictures and question number 2 is am I trying to improve the picture by changing settings in display on the Dell or changing the display on the tv if I can or the flight sym settings which are quite a few?  Where I am at now the flt sim menue to set up flights is only about 1/4 the size of the screen until I say Fly Now then the whole screen fills up, not sure if this is normal or if the small setup screen is wrong?

Thanks Sterk03