You appear to be cloning your internal LCD and as long as it is active, the resolution setting for the LCD is also controlling the resolution of the external monitor. When the LCD is closed, then the default resolution of the external monitor is being used by Windows 7 (It apparently has autodetected the size of the monitor and knows the Highest optimal resolution it will display.) The higher the resolution, then smaller the icons.
To resolve, go to display properties and check the resolution of the internal LCD and then set the External display to the lower resolution.
You should be able to wake the system with an external keyboard, by pressing the spacebar, if the system is sleeping
Testimonial: "Thanks, my LCD Problem is fixed. I have an external keyboard and mouse connected by USB but neither one will wake the computer from sleep. "
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