The higher the resolution I pick, the smaller the image gets

Open NWN.ini in the game's installation folder with any text editor.

Check the resolution setting:

[Display Options]
Width=1680
Height=1050

Try your native monitor resolution (usually your desktop's resolution). If it doesn't work and you've got a widescreen monitor, try 1680x1050 or 1280x720.

Using your native resolution should fill the screen, a smaller one has to be scaled. There's an option in your graphic card's control panel to enable this function (usually among the display settings).

Assuming you're talking NWN1 - unfortunately the game itself has some strange default scaling. Here is another topic about the issue. If you have a proper video card (NVIDIA / ATI?), you can override the game scaling in your graphics card control panel, as described in that topic. If you are using on-board graphics (Intel HD), I think there is no such option in their drivers, last time I checked, so you might be out of luck there.

(Just realized I posted in that topic. Still have no idea what the equivalent fix is for ATI cards).