I've had that issue before, but it turned out to be something I was doing wrong. I'll get back to you on it ASAP.
edit: Got it. Right-click in the video pane, and in the drop-down menu, click Video Frame -> Touch Window from Inside, and make sure the Keep Aspect Ratio option is checked. That makes sure that the proper aspect ratio is kept, and that the video display matches to the size of the window. When you're watching a 16:9 video in 4:3 maximized or fullscreen, it shows the black bars above and below, but matches the width to the window/screen.