here's what's been happening.

I recently bought a cheap 720p Element electronics 32" LCD TV, got the basic iO TV cable from optimum and set it up all nice.

The Scientific Atlanta 4250HD was adjusting the output according to the channel, i.e 480 for SD, 720 or 1080 for HD etc

However, when I watch shows on HD channels, the screen has horizontal gray bars on the top and bottom or even worse, sometimes displays in 4:3 with the same gray bars. I know for a fact that House on Fox fits perfectly into the 42" magnavox LCD, so what gives?

I checked the image/zoom settings: the tv is on full, the cable output is on normal.

The thing that confuses me is that the SD version of channels actually automatically displays in 16:9

Any clue what's going on with the cable or TV?

here's what's been happening.

I recently bought a cheap 720p Element electronics 32" LCD TV, got the basic iO TV cable from optimum and set it up all nice.

The Scientific Atlanta 4250HD was adjusting the output according to the channel, i.e 480 for SD, 720 or 1080 for HD etc

However, when I watch shows on HD channels, the screen has horizontal gray bars on the top and bottom or even worse, sometimes displays in 4:3 with the same gray bars. I know for a fact that House on Fox fits perfectly into the 42" magnavox LCD, so what gives?

I checked the image/zoom settings: the tv is on full, the cable output is on normal.

The thing that confuses me is that the SD version of channels actually automatically displays in 16:9

Any clue what's going on with the cable or TV?

The channels send the signal that way unless they are actually showing HD at the time.

SOunds as if you might have an analog connection to your TV, S-Video or Composite. The SA box will send only LB version of 16:9 programs to your TV via analog connection.

The cable box appars to be set to output to 4:3 aspect ratio screen instead of to a 16:9 aspect ratio screen.

I have component connection, which is analog but is supposed to be able to output at full resolution of the broadcasts. I am absolutely sure that ESPN broadcasts games in full screen HD, and fox broadcasts shows like House MD in 16:9 too.

The main problem I'm having is why the SD channels show up in full screen without stretching or cropping of the image but without the clarity of the HD channels

As I stated before your cable box thinks it is outputting to a 4:3 aspect ratio TV.
And since your TV sets and saves setting deparatly for each resolution it receives it appeasrs that it is set to Zoom when receiving 480i or 480p and set to non zoom wide screen when reciving 720p or 1080i.