I currently have an Acer 19" Widescreen Monitor with an aspect ratio of 16:10 and a response time of 5ms which is connected to my 360 with a VGA cable. The monitors native resolution is 1400x900. Which resolution and picture settings would produce the best picture on this monitor?

Also, I want to buy a 24-26" flatscreen HDTV within the price range of $600-800. I want one with a good picture and a good response time. Does anybody have some recommendations?

Any help would be appreciated. Thanks.

There is no good match for your monitor...
I would recommend setting the output resolution to 1280x720 and looking at the picture and then increasing to every supported resolution above that and once you've tried them all decide which one looks best.

the 360 still doesn't support any 16:10 aspect ratios AFAIK so really you'll just have to guess and check.

I currently have the resolution set to 1280x720 and it looks alright, but I don't have any other HDTVs to compare to. I assume the higher 16:9 resolutions would look better on my monitor, but I have no idea if those resolutions will make games lag. I was wondering which resolution would look best in theory on my monitor based on size and the resolution.

Thanks!

no resolution will make your games lag... the only thing you have to worry about when choosing a resolution is jaggies and or image blur due to the scaling circuitry in the monitor... these problems would be consistent through all games whether the image is moving or not.