You're probably seeing this on non-anamorphic widescreen DVDs. On anamorphic widescreen DVDs, the top/bottom black bars are not encoded as part of the video and it fills the screen as it should. On older non-anamorphic widescreen DVDs the black bars are hard-coded as part of the video, essentially with the 16:9 (or other wide aspect ratio) residing within a 4:3 image. As such, your computer sees this as a 4:3 image and displays it as such. Depending on the software you may be able to zoom to fit.

I've run into this with files transfered from my Tivo recorded from SD channels using letterboxed widescreen. I use PowerDVD use it's custom zoom (esentially you drag a frame around the video and it zooms to match that). On a 14" laptop I saw essentially no loss in video quality.

Hope this helps.