Ahh, try going into the main screen for the game, and then looking for a Wrench icon in the upper right, try "Windowed, Full Screen" and see if that helps.

Originally posted by Matches:

I get a 2 inch square instead of the full screen. Too small to play. How do I fix it ?

If the solution Nakos provided isn't accessible then the settings.txt file in Documents > My Games > Runic Games > Torchlight 2 folder
and possibly the other one in the > Save Folder
have the setting for full screen that can be edited outside the game.

Originally posted by Matches:

I get a 2 inch square instead of the full screen. Too small to play. How do I fix it ?

You have one of those massive monitors? It might be giving you a 640 x 480 resolution game window Yes as steffire said you can set display width and height in those files.