If your using a pc monitor for the 360 with VGA. Is the new setting suppose to set at standard, intermediate, or expanded?

Well, whatever you like, but I'd start with expanded. If that's too dark, try intermediate.

Got this part from an article about the new update.

The culprit for this problem is the difference between how HDTV and PC displays interpret black levels. A correctly calibrated HDTV typically expects a black level to be at 7.5 IRE (with anything below that to be “blacker than black”), while a PC display has its black set to zero. The Xbox 360, which is tweaked for televisions, has its IRE tuned for the HDTV norm of 7.5 IRE.

So wouldnt picking expanded be the right ticket since its set to 0 IRE?

Yes, that's why I said start with expanded. In the end you should pick the one that looks best.

What level is right depends upon each display but the vast majority of PC monitors should use Expanded (0-255 / 0 IRE) . I would guess that standard is 7.5 IRE and intermediate is 3.75 IRE .

--- Jason