Use safe mode, whenever the video is doing something strange. If that also
fails to work, then you most likely have a hardware problem.
When in doubt, set graphics to VGA (or default), then play with it later.
XP usually tests graphics changes before it makes them permanent. If you
like what you see, click OK, otherwise do nothing and the change will not be
permanent. This is great for testing changes, when you not sure how well
they will work.
That said, you generally want to have the display set to something that both
the graphics card and monitor can handle. Read their manuals for mutually
compatible options. Some graphics cards have options like show only
supported modes. That will prevent you from accidentally choosing something
that the card can not handle.
If you have an LCD monitor, then there is usually only one recommended
refresh rate; check the manual. If you have a CRT monitor (like an old
fashioned TV), then generally something above 60Hz is necessary to avoid
perceptible flicker to the human eye. The concept of flicker does not seem
to apply to LCD monitors.