Are you sure the screenshot is of a high enough res? If you set a lower res screenshot onto a high res desktop, it has to stretch it and you end up being able to see all the pixels ie as if your screen is set to low res. You just need to find screenshots that are 1600x1200 or near, which arent common. Even 1200x900 screenies are gonna look pixelated at your screen res!
You probably already know this, and ive just sounded completely patronising! Sry!
