HDMI Resolution issues

I noticed some strange behavior with photos the other day: They, as well as the screenshot images, have a border at the top and bottom suddenly, and are squished. They match the resolution of my TV (1080p).

Now, I checked and my TV says my WDTV sets the resolution to 1280x768. So I set it from Auto to 1080p (60hz). The pictures still appear squashed, even though the resolution is now correct. When I started it just now, I got no signal. After turning everything off and back on, the wdtv set itself to 720p.

Any idea what could cause this behavior?

What firmware are you running?

Latest one. The pictures being squished was fixed by a hard reboot at least.