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No, that is correct. Output resolution is the size of the window you want/screen you have, while Game resolution is the one you want the game to render in. (The first settings screenshot did have them the wrong way around but that was my mistake.)

I've done a new test with your resolution, and it seems it doesn't like 16:10 sized windows. If I set it to fullscreen on my 16:9 monitor, it does the scaling. If I set it to a window with those same dimensions, it doesn't.

In a window:

Fullscreen:

No, that is correct. Output resolution is the size of the window/screen you want to have, while Game resolution is the one you want the game to render in. (The first settings screenshot did have them the wrong way around but that was my mistake.)

I've done a new test with your resolution, and it seems it doesn't like 16:10 sized windows. If I set it to fullscreen on my 16:9 monitor, it does the scaling. If I set it to a window with those same dimensions, it doesn't.

In a window:

Fullscreen: