I find sometimes this happens aswell, but the refresh is reported by the nvidia-settings incorrectly. How I test this is, run any openGL game and make sure to set vsync to on.
When running the game the frames will be capped to your actual refresh rate. If the game is getting 85fps then your refresh is 85fps no matter what the nvidia-settings dialog tells you.
Also, typically with and interlaced setting as mentioned above, the screen typically looks like it is rendering every other line on your monitor so fonts and the desktop generally look messed up and somewhat blurry.
A good free game is Savage: The Battle for Newerth to try out the setting, you may need to go with a lower end game to actually test with though. www.s2games.com
click on the appropriate link at the top of there site and then go to there download section.
If you find that you are truely stuck at a refresh rate other than what it is suppose to be please let us know.