Letterbox display

I’m new to aTVFlash (and the Apple TV) so please be gentle…

I’m using Nirto to view some ripped movies on my non-HD widescreen TV. However, they are all being displayed in a letterbox format with large margins top and bottom (which end up accounting for roughly 1/3rd of the total screen height. The picture also looks somewhat vertically squashed.

I’ve a media hard drive that I have tried using to view the same movies and using this there are still margins but are much smaller and the picture no longer looks squashed. Are there any settings I can change to affect this.