I simply left this setting as-is (on aspect ratio). However, I didn't experience any crashing. Mine was default checked aspect ratio (same as your settings were).
So I did everything you said except for step 3.Ģ - Click adjust desktop size and position.ģ - Scroll down to Scaling. I still prefer the original 4:3 aspect ratio as opposed to it being stretched though. This actually worked! See my attached screenshot of my nvidia control panel settings. Choosing full-screen in the peggle options just made the game really small and centered on my display with black all the way around (top, bottom, and sides).
I decided to install Peggle again a couple of months ago for the first time in years, but couldn't get it working in full-screen mode on my 4k display. Information, Guides and Announcements for the EA app.