Had the same issue at my  client. What we settled on was a 1280
design, but all the core message/buttons had to be mostly visible
inside the ~1000x730 that's left after browser and XP chrome and
scrollbars.

  We use liquid layout for the verticle when text is long to avoid
keyhole/scrolling, but keep it fixed width and just center so the
designers can wrap their heads around it.

As others have said, In general just because one has a huge screen
size, does not mean that it's available, or that every pixel should be
packed with information, it's still a matter of focusing the users
attention at the right time on the right 'where can I go from here',
and  here 'white space' can help with this.
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