FWIW, I do believe it is currently displaying correctly. HD looks great, and 4:3 content on SD channels have the side bars. So, I would say that it's doing it correctly.
However, with watching SD content stretched since we've had the TV on those SD channels, we sort of just got used to it, and now the bars just look weird. I think it was a stretch feature that just did the edges and a little bit of the middle portion of the TV as to not look totally stretched out. And I can see that option in the TV menu, but it's just not stretching (I believe it's the "Full" setting). I think with that setting it's supposed to 'look' at the input aspect and display it on the full screen. So in theory it doesn't mess with HD content since it's already correct (displaying 16:9 content on a 16:9 screen), but it does stretch, or display the full SD content onto the screen (4:3 onto 16:9 screen).
It's not a huge deal and we could probably get used to it this way, but it just bugs me what I did.