I had the same issue with my new Surface Book 3. Just wanted to share my findings in case I can assist someone else.
TL;DR - Connect using HDMI if possible, avoid DisplayPort over USB-C (at least until Microsoft releases a driver update)
Full story:
I have a Dell Latitude 5290 2-in-1 from work, I also bought a Surface Book 3 (SB3) to replace my aging Surface Pro 4. I own a Dell D6000 USB-C dock (cheap DisplayLink dock that is flaky at best with the SB3) and a 1st-gen Surface Dock (also performed pretty
badly with the SB3), and wanted to replace both with a better USB-C dock that supported DisplayPort over USB-C since I could now dock my new Surface Book 3 via USB-C vs. the proprietary Surface Connect.
I decided on the Dell WD19TB (Thunderbolt edition) because the Latitude 5290 supports Thunderbolt, and the dock is capable of falling back to DisplayPort over USB-C for non-Thunderbolt devices (like the SB3). The dock was connected to my Dell U3415W ultrawide
monitor (via DisplayPort) and several USB peripherals. Everything worked beautifully with the Latitude 5290 via Thunderbolt, but I experienced the "640x480" issue when I connected the dock to my SB3. I tried manually installing the drivers for my monitor,
updating the Intel graphics driver, etc. but the issue persisted.
A call with Dell support suggested that I had purchased the "wrong dock" (despite the information about it reverting the USB-C being published on their support site) and that I should exchange it for the non-Thunderbolt WD19. I arranged the exchange and
waited for the new dock to arrive. Once I received it, I set it up exactly the same way and experienced the same issue...
I came across this thread and a few others and messed around with the version of the Intel Iris Plus graphics driver installed on my SB3. I saw that other people with the Surface Pro 7 and Surface Laptop 3 had success with downgrading to version 25.x (I do
have a Surface Laptop 3 in the house that I may test this out on), but my Surface Book 3 is too new to have an older driver package available. I downloaded the 27.x (newer than the 26.x version on my Surface Book 3) from Intel, but that made things worse -
nothing was displayed on the external monitor at all. I also attempted to download version 25.x from Intel, but that package would not install on the Surface Book 3.
I was about to give up and revert to the D6000 dock (I was getting random USB disconnects when using it with the SB3, but it was better than the 640x480 resolution and it least "worked" with both PCs). I then decided to try connecting the WD19 to my monitor
via HDMI instead. Lo and behold everything just "worked". I have read concerns from others that HDMI may not deliver the same quality as DisplayPort, but for my needs I don't notice any discernible difference. Perhaps if Microsoft gets their act together on
fixing the driver issue I will revert back to DisplayPort (after all, it would just be a simple cable swap), but for now I am just happy to have everything working as expected.
Hopefully this helps another SB3/SL3/SP7 owner out there!
PS: I also strongly suspect that the WD19TB would have worked just fine if I had switched to HDMI, but I can't confirm that as I didn't attempt that when I had it in my possession. Now I regret exchanging it since I can't take advantage of the Thunderbolt
connection on the Latitude 5290. Thanks Dell support...