|I just came across your post and sounds like I had an identical problem with my 1737 recently. When I plugged the computer in, the display dimmed dramatically but when I unplugged it, it would brighten up to normal brightness.|
I found that it (at least in my case) had to do with my installing Service Pack 3 for Windows Vista. After installing SP3 Windows apparently inverted the plugged in/unplugged brightness settings and the power management can't fix it. Dell tech support was useless in helping with this, and sent out what amounted to a new computer in parts and the at home tech left the computer not functioning at all. I was left to getting it running myself by doing a system restore and editing some bios settings that the tech changed incorrectly.
The Fix for the brightness issue that worked for me in the end: Plug the computer in so it runs on AC and then press Fn+Up Arrow until the brightness reaches 100% (or whatever level you like the brightness at) and then unplug the laptop so it's running on battery and press Fn+Down Arrow until you reach about 50% brightness. The computer will remember your settings and when you plug it back in, it should brighten and when you unplug, it should dim as it did originally.
Hope this helps!