Important question, what kind of cable are you using for the monitor?
If you're using VGA (the blue one), it's pretty much guaranteed to be blurry. Switch it to DVI (the white one) or HDMI/DisplayPort if your monitor supports them and you'll see considerable gains in picture quality. WinXP tended to handle VGA a little better than Vista/7/8 because of the way it renders text (cleartype wasnt really a thing back then).
The laptop looks fine because the connector is most likely some sort of proprietary version of DVI for the internal monitor. You don't have the option of using the crappy connector