On my Pioneer 5070 I have it set not to stretch 4:3 channels and I get Grey bars on the sides instead of Black bars. But I do get Black bars if a non HD program is shown on an HD channel.
Is this normal?
totally normal, when an HD channel broadcasts a 4:3 program the black bars are essentially built-in to the image. your TV sees an HD channel and assumes it's 16:9, it has no way of "knowing" that it is really an SD program encased in an HD broadcast.
Also where are he following settings in my Denon AVR 1610?
note where I say at the top of the Setup Guide:
NOTE #2 - Not all Denon AVR's have identical functionality, so some of the items discussed below may not be present on your specific receiver.
The AVR 1610 does not have a scaler at all, so it does not have the ability to stretch anything or change resolution. There are no options at all for video conversion, it simply works automatically and any analog sources will be digitized for HDMI output with zero processing or scaling.
The only thing it can do is deinterlace 480i > 480p if it detects that your display doesn't accept 480i over HDMI.