The display is only sending two supported resolutions back, one of which is unsupported by the DisplayLink adapter.
AppDevice.cpp:411 Modes: EDID: monitor HWP2690 (HP LP3065) modes: 1280x800@59.9095 RB, 2560x1600@59.8599 RB
The 2560x1600 is not supported by the adapter, so all it can do is 1280. You might be better off connecting this display to a native video adapter which supports dual-link DVI, rather than through the DisplayLink.
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