Well, I just don't seem to understand your description of the problem very well.
#1: The mouse pointer. You're not seeing it at all? Because on e-ink, it will always be a bit flimsy. Also, there are VNC servers that do not forward the mouse pointer, errorneously assuming that the client will show its own.
#2: The resolution setting. I don't know what you mean with "displays even less of what is on my monitor". At least not in conjunction with "The lower I set it, the less space it uses on the kindle". At some point, at least at 800x600, everything on your monitor should be visible on your Kindle. And you did still not tell if it's the KDX you are using. Is it? Because if so, the resolution you need is 1200x824. That will be a bit hard to find in a list of standard VGA resolutions. It depends a lot on your graphics driver.
By the way: There are VNC servers, too, that can do scaling.
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