Some apps are programmed to use a specific number of pixels when displaying text, so your DPI changes wouldn't make any difference, since the program itself is forcing them to be small. Aren't there any options within the app to change text size?

 I have found the best way to make my 1400 x 1050 resolution screen look like my old 1024 x 768, only with the clearness of the the 1400 x 1050. It tool alot of "fiddling" but here are my settings.

#1. Right click on your Desktop, click on Properties, then go to the Settings tab,then to the Advanced tab, then set the dpi to 150%. (Yes, 150%).
#2. Go to the Appearance tab.
Set the Font Size setting to Normal Fonts.
Click the Advanced tab to the right. Click on the words "Active Window" in the example windows above. The field below named "Item:" will say "Active title bar." Set this to 38. The Font setting below should be at 10. Click Ok.
#3.Now click the Effects tab. Make sure "Clear Type" is selected and that "Large Icons" is selected. Click Ok.
#4. To "free" Internet Exploror to allow you to adjust font sizes,open Internet Explorer, select the Tools tab, then select Internet Options. Click the Accessibility tab at the bottom of this menu. Check the "Ignore Font Sizes" option then click ok.
#5.To adjust text on the pages of Internet Explorer go to View,> Text Size.

I know many of these suggestions are well known procedures,but there may be someone out there that might save time and aggravation by following these steps. Of course,these are only my preferences and you must fiddle with these adjustments as well to your own liking. These steps sure helped my apprehension about the new 1400 X 1050 high resoltuion screen.
I will also mention that this will not make all programs "look right" but I can live with the little differences here and there. I am still fooling with this so I may post again later.

Thanks Spike. I adjusted my fonts on Aol IM. Also see my article titles "Small Text Fonts".

After formatting my hard drive and reinstalling Windows Xp everything looks better than before. Images and text on web pages are more proportionately right now. I have the dpi set to 120 %. This is the only change I have made after reinstallation.