If the above procedure doesn't work for you, you can try to use the game's configuration file (ldw.ini) to force VF2 into full-screen mode. Make sure you quit the game, if it is running, then try the following procedure:

To change the display mode of your game:

Look in the folder where the game is installed (it's usually found in Program Files on your hard drive). In that folder you should see a file called either ldw.ini or ldw with a file type of Configuration Settings (the icon will look like a notepad with a gear on it), depending upon how you have your folder options set in Windows. If you double-click on that file, you should see the file opened in Notepad and displaying several settings.

To force the game into full-screen mode, you should change the settings in that file so that they look like this:

[ldw]
Fullscreen=1
ForceFullscreen=1
ForceWindowed=0
UseVsync=0
Distributor=LDW

Then select File=>Save and the new settings will be saved. Try running the game again and see if it displays correctly.