Why archive page can’t show full content?

When there is <!--more--> tag inserted in post, this post will be truncated on lists pages.

You can use global $more variable to make WordPress think it’s single page though. Here is your modified source:

<?php query_posts('cat=1&paged='.get_query_var('paged')); ?>
<?php global $more; $prev_more = $more; $more = 1; if (have_posts()) : while (have_posts()) : the_post(); ?>
<div <?php post_class() ?> id="post-<?php the_ID(); ?>">
    <?php the_content(); ?>
    ...
<?php endwhile; endif; $more = $prev_more; ?>