Secondary display with VGA connection resolution issue with Macbook Pro under Snow Leopard
Either the VGA cable you are using (or DVI-VGA adaptor, if you're using that) isn't correctly wired for EDID monitor identification, or the monitor itself is sending incorrect EDID information. 

Try another VGA cable (or DVI-VGA adaptor, if you're using one) and see if that resolves the problem.  If not, it's likely that your monitor doesn't implement EDID over the VGA connector correctly.