Am I missing something?

same here. High resolution is not applied. and i have Text issues at Classic Battle.net. hm...

Its not supposed to. It will ether be upscaled by your graphics card, or it will be upscaled by the game. If you want HD textures, youll have to download a mod which zooms the game out.

For sharper and crispier text, we have to select Presentation in Windowed mode, with integer scaling.