Using Linux Mint 18 with Nvidia GT525M display drivers. When external monitor is not plugged in (via HDMI) the screen resolution on my notebook is perfect, but as soon as I plug in the external monitor via HDMI, the 2 screens are mirrored and the resolution is way off.
How can I rectify this so that the resolution settings are saved permanently OR how can I set the resolution in the /etc/x11/xorg.conf file?

xrandr is normally how I do the switch. You can also put the monitors at other than cloned orientation. Although most times I leave them cloned and turn off the laptops display.

$ xrandr

$ xrandr --output HDMI1 --mode 1920x1080 --panning 1920x1080 --primary \
--output eDP1 --mode 1366x768 --panning 1920x1080

With the --primary so when I fullscreen something it uses the resolution of the larger monitor. With various other tools depending on the hardware. amdcccle, nvidia-xconfig, and others. Many of the more mainstream desktops have the right mouse -> properties type settings from a bare desktop. And there's arandr for a gui frontend for xrandr, but YMMV.

I'm not sure if it interferes with the nVidia way of doing things, but my usual solution is to use arandr to set up my desired multi-monitor setup. arandr is just a graphical front end to xrandr which makes it easy and intuitive to set it up. But it does not directly interact with your Desktop Environment to save the changes anywhere permanent.

Rather, arandr gives you the option to save your settings as a bash script. The bash script includes the necessary xrandr command line to set up the multi-monitor setup. You can then make a shortcut icon/button for this script. I use XFCE4, and if it's something where I'll have different multi-monitor setups on a regular basis, I create a custom launcher menu in the toolbar for the different setups.