Can it be updated? Is it not compatible? Does anyone have any suggestions?
It does not appear a newer driver is available. It is compatible in the sense it will drive the monitor, just not at the ideal resolutions. Your only option really is to install a graphics card. Note you currently do NOT have a card. You are using the motherboard's integrated graphics. IGP = integrated graphics processor.
There are 1000s of options available but before anyone can offer any suggestions, we (and you) need to know what graphics interface your motherboard will support. The typical interfaces are PCI, AGP, and PCI Express (PCIe). In spite their similar names, PCI and PCIe are totally different and not compatible.
PCI is the oldest and most motherboards still have PCI slot. Next was AGP, but they have superseded by PCIe.
Also note that even an entry level PCI card will likely support the new monitor's native resolution, and the card will surely have a better graphics processor. But also, the card will come populated with its own RAM tweaked for graphics processing. This is important because it then means the system RAM, previously snagged by the IGP for graphics processing can be released back to the system, resulting in a little increase in system RAM. So the end result is a boost in over all system performance.
The only downside is the card requires power and if there have been other hardware upgrades or additions since the computer was new, you may need a bigger power supply too.