This is kind of half a bug report, half a solution, so pardon me if this sounds stupid. Yes, I searched the forums and the FAQ first.
I wonder if anyone else has encountered this problem. I've experienced this with all of season 1, and Ice Station Santa. (While testing with Moai Better Blues, I found the workaround, detailed after.)
By default when each episode's first installed, in my experience, resolution defaults to 800x600, full-screen. On my old computer for season 1 (only, not s2), I had a monitor at 1024x768.
Changing the resolution, however, has been fraught with danger. On my old PC (2GHz Celeron [I know, it was nearly 4 years old], 1.5GB RAM, GeForce FX5200), if I tried to change the resolution while the game was engaged in drawing 3D at all (i.e., if I loaded a game), it'd lock up the computer completely and I'd have to push the power button to get out. However, if it was just on the main menu screen, it could switch. This meant that I had to exit the game after the opening cinematics, open it again, change the resolution, and then start playing. Also of note, this would take some time--upwards of 30 seconds while my computer flipped out. Could've been my computer's fault, but...
After beating season 1, I got a new computer, new 1680x1050 monitor. Specs-wise, it's a dual-core 3GHz with 2GB of RAM and an Nvidia GeForce 8400 GS with 512MB onboard--easy beans for S&M, I'd hope.
I haven't tested season 1, but here's what happens with season 2. By default, again, it's 800x600, full-screen (which looks...not that great on a large monitor). If I try to change the resolution (even from the main screen before loading the 3D), computer locks up. The computer starts to look like it's changing resolution, just as season 1 did, where a portion of my screen, around 800x600, is a black square, and my wallpaper shows through the rest, but it locks hard and won't come back, even on a fresh restart. This has been tested on Ice Station Santa, and it looked like it'd happen with Moai Better Blues. Even avoiding loading the 3D environment doesn't save me from having to kick the switch on the front panel. But I found a workaround.
Just as I was preparing this post, I discovered that, if I toggle into windowed mode FIRST before touching resolution at all, it doesn't care what I do as long as I pick a resolution my monitor can display. I have successfully (and RAPIDLY--no 45 seconds of black boxes and seriously chopped audio like season 1) managed to switch from 800x600 to 1680x1050 fullscreen on Ice Station Santa and Moai Better Blues by switching to windowed, changing resolution, and switching back to fullscreen.
Telltale folks, has anyone else reported this problem? I've had the resolution switching problems on both computers and both monitors (I used the old monitor on the new PC before getting the new one, and season 2 was cranky on both. The old PC hasn't had the new monitor.)
Edit: I just want to add that once I got the resolution set for each episode, the game ran flawlessly and didn't complain any more. Only when trying to switch resolution. Oh, and it's all on XP.