On some systems when you try to set a resolution over 1024x768 Descent 3 switches it back to 640x480. To set a higher or custom resolution you need to add a few command line parameters via the game's Setup utility. To open it you must launch the game and select Setup from the launcher window.
Now click the last tab ("Misc"). You must input the command line parameters in the "Optional D3 Command-line Switches" field. You need to know the vertical and horizontal resolution you want to use and its aspect ratio (width/height, if different than 1.33) and use the following parameters:
-width X -height Y -aspect X/Y
Here are some examples:
To use a 1280x1024 resolution you should add:
-width 1280 -height 1024 -aspect 1.25
To use a 1680x1050 (Full HD) resolution you should add:
-width 1680 -height 1050 -aspect 1.6
And so on... Please note, the game may have problems running at 1280x960. We recommend using 1280x1024 instead.