The onboard display adapter of MicroServer N40L is currently sufficient for me so I do not add a faster PCIe video card. It is connected to my 1080p HDTV through VGA connector. However, the R2 default Super VGA driver only supports a limited list of resolutions, all lower than 1080p. I checked the HP user manual, and it states: Graphics: 128MB shared supporting 1920×1200 @ 60Hz. So I modified the shared graphics memory in BIOS to 128MB. This makes more display modes available, however, none of them is exactly 1920×1080, and therefore the desktop is severely stretched and looks ugly. Obviously, the default Super VGA driver in Windows Server 2008 does not support many different resolutions.
By running AIDA64 Extreme Edition (30-day free trial), it is clear that the onboard video adapter is actually AMD/ATI Mobility Radeon HD 4200. It might be a crippled one (shared memory, slower clock etc), but at least AIDA64 gives hint on what driver to download. Just go to AMD website and download a Windows 7/Server 2008 Catalyst driver for it. After installation, the system automatically uses 1920×1080 resolution correctly. In fact, I lowered the shared memory setting in BIOS to 64MB and it works fine with 1920×1080 32bpp @60Hz.
There is some problem in getting AMD Catalyst Control Center running, and this is covered in another post.