If you have to correct resolution, the hertz is what is making it blurry.
Hit the "Auto" button on your monitor. It should make it clear again. If not, I believe there an option in the monitor's menu called "Fine-Tune". Adjust it.
Edit: Upon actually reading your posts, I saw that you said images come up clear on IE but not Chrome, and Steam is blurry on your desktop, but not in game? That makes it sound like a software issue, and in that case a screen-shot would show the problem. Take a screen-shot and then upload it so we can see it.
Edit 2: I think I might know what it is.... Right click your desktop and choose "Screen Resolution". Then click "Make text and other items larger or smaller", now set it back to 100% if it's not already. It will prompt you to re-log or reboot, do so.
Edited by Khaotik55 - 1/2/11 at 12:00am