I recently downgraded from a Athlon64 to a P2, which also meant that I now have a ATi Rage Pro 3D as (onboard) gfx processor. I do however still have my 20" Widescreen TFT, but it stretches the 4:3 image it gets from the VGA port making it very ugly. Is there a way to set this gpu to a 16:9 resolution like 1680x1050 (or lower)? I installed the latest drivers for the gpu, i couldnt find any for the monitor (LG L204WT).

If your drivers are installed correctly, then in the display panel -> settings tab, all the resolutions that both your video card and monitor share as compatible resolutions will be displayed. So if your video card wasn't designed to support widescreen resolutions, then those resolutions won't show up in the slider bar. I don't think there is a way to force the video card to display other resolutions.