Really? Is a 16x9 resolution supposed to look like this? Any way to fix it?

Black at the Top and Bottom = Letterbox mode. Pick a different resolution. (And yes it should look like that if your monitors native res is higher than letterbox res you chose. )

Set it to 16x9 then pick anything that does not end in [Letterbox]

Hi,
try to change the MODE directly on your LCD Monitor.
I e.g. have a Samsung and i can switch between "16:10" and "Auto" mode.
One of thouse is with bars and the othe in full screen.
I hope it helps.