I activated the ClearType and things do look better. However at
1920*1200 resolution the typeface isn't black, white, or any consistent
color. Each character is made up of several different colors and it
doesn't matter whether I'm using small, large, or custom font settings.
Is there any way to fix this?

Poor quality DVI/VGA cable? Those high resolutions can stress them,
particularly ifs it's 5m or more.