I am running BackTrack 2 on my laptop, and I have installed the ATI drivers for my graphics card. I have a 15.4” monitor on this laptop, and its native resolution is 1280x960. However, the highest I can set my resolution on the Configure Desktop function is 1280x800. I can work in it, but it looks stretched a little. I have modified the xorg.conf file, but I really don’t think that xserver looks to this file for the resolution configuration, because no matter what I do to that file, it still loads the 1280x800. How can I force the desktop to use the 1280x960 resolution? Thanks in advance.

try the xrandr command.
xrandr -s 1280x960

Run that command while being logged into the GUI, or should I CTRL ALT Backspace out before I run the command?

EDIT
Also, would that make the changes permanent, or would I have to run the command everytime I log into linux? And if so, is there a way to run the command as the machine boots?

Run it from the GUI