recently (and suddenly) I encountered the following problem on my 1040STE.
I uploaded a quick video
As you can see my video output is disturbed... It is not the SM124, as I have more than one, and I tried with multiples monitor... same issue: so it is definitely a problem of the video output on STE.
It seems the TOS and GEM are loading normally. I can barely see the cursor and the desktop (icons, upper bar, etc...); but without the correct vertical and horizontal syncs.
I am wondering if the machine is stuck in low resolution even when you have a mono monitor connected to it, due to a fault on the 'mono sense' input on the monitor socket.
Do you have a standard definition RGB monitor or TV with RGB-in, along with a suitable connecting lead? If so, try it to see if it is working normally in low and medium resolutions. Alternatively, try viewing the low resolution output on a TV, via an RF lead.
There's a simple check to find out whether the 'mono sense' sensing input is working. With the machine on, booted, and no monitor connected, make a wire link connection between pins 4 and 13 on the monitor socket and leave it connected. The moment you make the connection, the STe should reboot because it has detected a change of monitor from 'Not Mono' to 'Mono'. Give it time to finish rebooting, and then remove the connection - the machine should reboot again because it thinks the monitor has been changed from 'Mono' to 'Not Mono'.
If the machine does not reboot when you do this, it probably means the mono monitor sense input is defective, leading the computer to think that it always has a colour monitor plugged in, even when you plug a mono monitor in.