I would guess you have the monitor properties in Control Center set to 'Use Centered Timings'. One of the odd things with the properties setting is it always appears to revert to 'Scale image...size' when you change the montor res back to 1920x1080, but this is not the case.
Go to Control Center > My Digital Flat Panels > Properties.
Select 1280x720 res on the monitor via Windows then - select either 'scale image to full panel size', or if you want 4:3 aspect ratio resolutions look normal (not stretched but with black bars on sides) use 'Maintain aspect ratio'.
You may have to clear the tick box next to 'Enable GPU scaling' and click apply first to be able to access the other settings. Then select the option you want and Tick Use Gpu Scaling again if necessary, and Apply again.
You can now set the monitor back to 1920x1080 and the game should run full screen @ 1280x720, inspite of it saying 'letterbox' in the games settings.