Do I understand correctly that you want to make your application fullscreen with 1024x768 fullscreen resolution?
Here's the way to do it in DXGI:
1) Create swapchain with DXGI_SWAP_CHAIN_FLAG_ALLOW_MODE_SWITCH set (otherwise, DXGI won't try to switch desktop resolutions)
2) Call ResizeTarget with DXGI_MODE_DESC with Width = 1024, Height = 768 and everything else set to zero.
DXGI_MODE_DESC desc;
ZeroMemory(&desc, sizeof (desc));
desc->Width = 1024;
desc->Height = 768;
pSwapChain->ResizeTarget(&desc);
3) Finally, make swapchain go fullscreen:
pSwapChain->SetFullscreenState(TRUE, pOutput);
Now you should be in fullscreen and kicking with the right mode set (1024x768).
Note that swapchains backbuffers are not necessary the same resolution (by default, they remained the same size as on swapchain creation), so you could still see lower resolution image in fullscreen.
The right way to deal with it is calling ResizeBuffers with the right backbuffer resolution (in your case, 1024x768).
4) pSwapChain->ResizeBuffers(backbuffercount, 1024, 768, backbufferformat, DXGI_SWAP_CHAIN_FLAG_ALLOW_MODE_SWITCH);
In fact, it's recommended that app calls ResizeBuffers as a reaction to WM_SIZE message, which then would happen automatically on ResizeTarget/SetFullscrenState.
Hope that helps.